LONDON, Dec 1 (Reuters) - Rating agency DBRS said a 'Yes' vote in Sunday's constitutional referendum in Italy would be the best outcome for the country's credit rating, which is currently under review with the threat of a downgrade.
DBRS' rating is key because a cut to Italy's A(low) rank would mean its banks would have to pay more for European Central Bank funding under current rules. DBRS has delayed its review until after the referendum and must conclude it by Feb. 3, 2017.
"If a yes vote prevails, then we would assume (Prime Minister Matteo) Renzi stays in and he has a mandate to continue with his economic reform programme. That would most likely be the best outcome from a credit standpoint," DBRS' co-head of sovereign ratings Fergus McCormick (NYSE:MKC) told Reuters on Thursday.
"If the referendum is defeated by a very wide margin, and then snap elections are called, this raises the political uncertainty...We are concerned about investor sentiment in this environment."