Credit Rating Downgrade

A Warning Shot from Canada

  • Why it matters

    Why it matters

    The latest credit ratings drop for Italy will only make it harder for the southern European nation to climb out of the financial situation it’s in. Handelsblatt’s Yasmin Osman points out the dangers of the vicious cycle between banks and nations, and the abilities of either to harm both.

  • Facts


    • Now all of the major ratings agencies have downgraded Italy from A to BBB.
    • The downgrade will make it more expensive for Italy to borrow from the European Central Bank.
    • Canada’s DBRS is the fourth largest ratings agency in the world, with about a 2.5 percent global market share.
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italy Readies $21 Billion Bank Bailout As Monte dei Paschi di Siena SpA Plan Fails
The poorer credit rating will make it more expensive for Italian banks to borrow money from the European Central Bank. Source: Bloomberg [M]

Canadian rating agency DBRS usually leads a shadowy existence in public perception. Unlike its big U.S. rivals Moody’s or Standard & Poor’s, only specialists are aware of its existence.

But for Europe these credit assessors from Toronto will determine whether the euro zone’s debt crisis has flared up again or not. This circumstance is shining a bad light on the state of the European Union and the previous attempts to curb the sovereign debt crisis that began in 2010 with the Greek crisis.

After stock markets closed on Friday, the Canadian rating agency lowered Italy’s credit rating from “A” to “BBB” – the last of the major rating agencies to do so.

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