The rating that Moody’s gives to this bond is significantly higher than that assigned to BTPs.
While waiting for the Moody’s verdict, which at this time last year so scared Italy and its BTPs, it can certainly be said that Italian government bonds are experiencing a golden moment, now also strengthened by the confidence recently confirmed by the rating agencies Fitch and S&P Global.
The first has also improved the outlook on the evaluation of Italian public debt, bringing it from stable to positive, to the delight of the Meloni government.
At this point, the sentences on Moody’s BTPs and the others, namely Scope Ratings and DBRS, are awaited.
There should be no big surprises, given that Italian debt is not considered among those most at risk of downgrade: if anything, the opposite, as Citi analysts pointed out in a note written before the double sentence by Fitch and S&P Global.
For at least a year, Moody’s has not been as alarming in Italy, as there is no longer the risk of BTPs being downgraded to “junk” status.
Moody’s did in fact surprise, at the end of 2023, but not with a downgrade, since, on that fateful date of November 17, 2023, what was announced was not a downgrade but an improvement in the rating of BTPs from “negative” to “stable”.
Generali bonds better than BTPs for Moody’s. Will it be the same for UniCredit?
That said, there are some Italian bonds that for Moody’s are certainly worth more than BTPs. Among these, those of the insurance giant Generali, rewarded by the rating agency a few days ago: on October 17, according to what Leone di Trieste himself announced, Moody’s confirmed the assessment of the financial strength (Insurer Financial Strength Rating - IFSR) of Generali at “ A3 ” with a stable outlook.
The rating assigned to Generali bonds is immediately noticeable: significantly higher than that assigned to BTPs.
Although BTPs are no longer at risk of being downgraded to “junk” - at least not right away, since the outlook is stable for now - the current rating is certainly not one to be proud of, just as the ratings that S&P Global and Fitch confirmed on Italy last Friday are certainly not enviable: in the case of these two latter agencies, it is a rating of “BBB” while, in the case of Moody’s, it is a rating of “Baa3”, the latter being the lowest in the ranking of ratings that can be considered “investment grade”.
The view on Generali is therefore decidedly more optimistic, with Moody’s still deserving a rating of three notches higher than that given to BTPs. In general, the rating, as stated in the note from Generali, “reflects the excellent business profile of the Group, which benefits from leadership positions in Europe, the diversification of business lines and the relatively low risk associated with the products”.
A few weeks ago, it was also learned that Moody’s does not rule out bringing UniCredit’s rating to a better level than that currently recognized for BTPs, in the event that the Italian bank led by CEO Andrea Orcel were to join forces with the German Commerzbank.
In confirming “the rating of UniCredit SpA’s Senior Preferred (unsecured) debt and long-term deposits at Baa1, with a stable outlook”, Moody’s wrote, according to what was announced by Piazza Gae Aulenti itself, that, “in the event of UniCredit’s acquisition of Commerzbank, it will consider the possibility of improving UniCredit’s stand-alone rating (Baseline Credit Assessment), currently at Baa3, to Baa2, one step above Italy’s sovereign rating ”: therefore, better than BTPs. On that occasion, the agency specified that the upgrade, “would also entail an increase in the rating for the senior non-preferred and junior debt” of the Italian bank.
Returning to Generali, in justifying the rating, Moody’s noted that the insurance giant "benefits from a significant degree of diversification beyond its home market, Italy, mainly thanks to its operations in France and Germany".
The note refers to other strengths of Generali, such as the "strong product diversification".
Indicative among other things is the fact that Moody’s sees in a positive light the fact that, "over the last two years, Generali has continued to reduce its exposure to Italian sovereign bonds which, at the end of 2023, accounted for approximately 8% of invested assets". Despite this, the agency specifies, "Generali’s rating reflects our view according to which a sovereign stress scenario for Italy would partially negatively impact Generali’s credit profile".
Original article published on Money.it Italy 2024-10-22 07:46:00. Original title: I bond che a Moody’s piacciono più dei BTP
