Scope Ratings has changed to Negative from Stable the Outlook on Cassa Depositi e Prestiti’s (CDP) ratings, citing the institution’s substantial business and balance-sheet concentration in Italian sovereign and sovereign-related risk. At the same time, the rating agency highlighted that while sovereign concentration and the government guarantee on a large segment of the institution’s liabilities are key rating drivers for CDP, they are not the only ones. Scope’s rating analysis continues to consider CDP as a viable financial institution on its own merit, noting that it is managed in an autonomous way for profit generation, rather than as a pure government agency. In addition to mirroring Scope’s assessment of the Italian sovereign (whose A- rating Outlook was recently changed to Negative from Stable), CDP’s ratings remain supported by the institution’s good financial fundamentals, as well as by its low-risk business model.

Scope noted that 2017 results confirmed the strong performance of CDP in terms of financials, with revenues outgrowing costs and with a declining cost/income ratio. The institution continued to execute on its business plan, targeting infrastructure investments, and providing support to Italian companies in their internationalisation efforts.

Going forward, the rating agency cautioned on the potential uncertainties related to the new political dynamics in Italy. It added, however, that it draws some degree of comfort from the fact that CDP’s by-laws contain provisions for enhanced minority rights. Accordingly, Scope believes that the banking foundations, which are minority shareholders, are likely to continue to exert significant influence on CDP’s strategic choices and that the nature of CDP is unlikely to change dramatically as a consequence of the new government.

The following ratings were affirmed with a Negative Outlook:

• A- Issuer Rating
• A- senior unsecured debt ratings
• S-1 short-term debt rating

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

Methodology
The methodology used for this rating(s) and/or rating outlook(s) Bank Rating Methodology is 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.

Solicitation, key sources and quality of information
The rated entity and/or its agents participate in the rating process.
The following substantially material sources of information were used to prepare the credit rating: public domain, the rated entity and third parties.
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 the issuance of the rating or outlook action, 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.

Regulatory Disclosures
This credit rating and/or rating outlook is issued by Scope Ratings GmbH.
Lead analyst Marco Troiano, Executive Director
Person responsible for approval of the rating: Samuel Theodore, Group Managing Director
The issuer and the senior unsecured debt ratings/outlooks were first released by Scope on 24.10.2017
The short-term rating/outlook was first released by Scope on 01.02.2018

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

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