May 29, 2018 / 5:49 PM / a month ago

DBRS says Italy government debt situation 'still manageable'

LONDON (Reuters) - Italy’s government debt situation is still manageable despite the sharp rise in borrowing rates in recent days as the country’s long debt maturity profile and improved economic fundamentals are supportive, ratings agency DBRS told Reuters.

Army officers march inside the Qurinal palace before Carlo Cottarelli meeting with Italy's President Sergio Mattarella at the Quirinal Palace in Rome, Italy, May 29, 2018. REUTERS/Alessandro Bianchi

A deepening political crisis in the euro zone’s third biggest economy has fueled a selloff in Italian assets and the euro on Tuesday that was reminiscent of the euro zone debt crisis of 2010-2012.

Though this will have an impact on sovereign funding costs, DBRS believes the situation is “still manageable”.

“This is because Italy’s public debt residual maturity is at around seven years so it will take time before average yields are impacted,” DBRS Italian sovereign analyst, Carlo Capuano, told Reuters in an emailed statement.

“In any case, Italy’s fiscal and economic fundamentals have improved in recent years,” he added.

DBRS currently rates Italy as an investment grade BBB (high).

Reporting by Marc Jones, Writing by Abhinav Ramnarayan; Editing by Mike Dolan

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