Scope Ratings has today assigned first time long-term ratings of A- to Cassa Depositi e Prestiti S.P.A (CDP), with Stable Outlook.

According to Scope, the ratings reflect CDP’s unique business model as the Italian National Promotional Institution (NPI). CDP’s mission is to support and promote Italy’s economic development and its scope of activity range from the traditional channelling of postal savings towards government and public administration finances to the more recent focus on export and development finance, corporate finance and real estate.

Scope noted that, CDP’s financial fundamentals, including profitability and asset quality, are good, particularly when compared to other Italian financial institutions. This is a result of CDP’s low-risk business model, which has proven resilient in the last recession in Italy. The rating agency highlights the negligible amount of non-performing loans and the low cost of risk as key drivers for the strong profitability of CDP.

The ratings also reflect the very strong implicit and explicit links with the Italian sovereign in terms of assets and liabilities. Reflecting its NPI mission, CDP’s exposure to Italian public finance (governmental and local) is material. Scope noted that the Italian State guarantees postal savings, but does not explicitly guarantee CDP’s other senior liabilities. However, the agency believes that support would be forthcoming if needed, given the importance of CDP’s to Italian Treasury’s liquidity and to public administration finances. This implicit expected support is embedded in the assessment of CDP’s business model and financial fundamentals. This reflects Scope’s belief that CDP’s business model and financial performance are directly linked to the institution’s public mission as NPI in Italy.

The rating analysis is based on CDP’s group consolidated financials. It considers the flow of revenues and profits arising from the group’s subsidiaries, as well as the dividends coming from CDP’s equity investments, which the agency sees positively. According to Scope, these dividends have supported revenues at time where falling interest rates were depressing net interest income.

Scope’s analysis mentions among potential rating-change drivers a material change in the credit fundamentals of Italy (rated A-, Stable by Scope), as well as a decline in the expected level of support, which could adversely affect the ratings of CDP. However, the latter would have to be coupled with a material change in CDP’s asset risk away from government-related activities and into riskier segments, which Scope does not see as very likely.

The following ratings were assigned to CDP, all with Stable Outlook:

• Issuer rating of A-
• Senior unsecured debt ratings of A-

The methodology used for the rating assessment is the “Bank rating methodology” (latest version published in May 2017) . This document can be downloaded on www.scoperatings.com.

Download the full issuer rating report HERE.

Regulatory disclosures

This credit rating and/or rating outlook is issued by Scope Ratings AG.
The rating analysis has been prepared by Marco Troiano, Executive Director. Responsible for approving the rating: Sam Theodore, Managing Director
The rating was first assigned by Scope on 24.10.2017. / The rating was last updated on 24.10.2017.

Methodology
The methodology used for this rating(s) and/or rating outlook(s) (Bank Rating Methodology - May 2017 are available on www.scoperatings.com.
Historical default rates of Scope Ratings can be viewed in the rating performance report on https://www.scoperatings.com/#governance-and-policies/regulatory-ESMA Please also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope’s definition of default as well as definitions of rating notations can be found in Scope’s public credit rating methodologies on www.scoperatings.com.
The rating outlook indicates the most likely direction of the rating if the rating were to change within the next 12 to 18 months.

Stress testing & cash flow analysis
No stress testing was performed. No cash flow analysis was performed.

Solicitation, key sources and quality of information
The rated entity and/or its agents participated in the rating process.
The following substantially material sources of information were used to prepare the credit rating: public domain, the rated entity, the rated entities’ agents, third parties and Scope internal sources. Scope considers the quality of information available to Scope on the rated entity or instrument to be satisfactory. The information and data supporting Scope’s ratings originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data.
Prior to publication, the rated entity was given the opportunity to review the rating and/or outlook and the principal grounds on which the credit rating and/or outlook is based. Following that review, the rating was not amended before being issued.

Potential conflicts
Please see www.scoperatings.com. for a list of potential conflicts of interest related to the issuance of credit ratings.

Conditions of use / exclusion of liability
© 2017 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings AG, Scope Analysis, Scope Investor Services GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings AG at Lennéstraße 5 D-10785 Berlin.

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