The ratings reflect CDP’s unique business model as the Italian National Promotional Institution (NPI) and its majority ownership by the Republic of Italy (rated BBB+, Stable Outlook), which, in our view, would fully support CDP in case of need.

CDP’s market liabilities are not explicitly guaranteed by the Italian state – hence, the conditions for an automatic rating equalisation for debt are not met. However, we deem it highly probable that the Italian sovereign would support CDP in case of need, given the issuer’s strategic importance to the government, the lack of alternative players that could credibly perform CDP’s role and the severe implications that a default would have on Italy’s economy and public finances.

The ratings also acknowledge CDP’s strong standalone fundamentals, which are notable compared to other financial institutions in the country. Reflecting its mission as the Italian NPI, CDP’s exposure to Italian public finance (governmental and local) is very material. Our supplementary analysis highlights CDP’s low asset risk and portfolio of equity stakes to be a source of standalone strength for CDP, as this provides a reliable flow of dividends, a useful source of revenue diversification into non-government-related activities.

Download the updated issuer report here.