The rating agency Moody’s considers that Portugal and Spain are better positioned than Italy to cope with the transition to the environment “after the European Central Bank (ECB) debt purchase program.”
The ECB put an end to its debt buy-back program which began in 2015, with which it accumulated bonds worth 2.5 billion euros, of which 12.55% corresponded to Spanish debt securities.
In a report published today, Moody’s explains that Italy, Spain, and Portugal will need to continue to diversify funding sources, “to meet their still very high debt needs” when the ECB finalizes its debt-buying program.
However, it considers that Spain and Portugal are well positioned to continue to manage this environment “after the debt purchase program, while Italy will face more significant challenges” because of its political and economic situation.
In the report, the agency highlights Spain’s higher credit quality and strong demand from foreign investors, while in the case of Portugal it values investors and increasingly diversified sources of financing.
These factors put the two countries “in a comparatively good position” after the ECB’s debt-buying program, Moody’s says.
“Although we believe that the risks of a liquidity crisis for Italy are low, the massive sale by non-resident investors from May this year means that managing the transition will be more difficult for this country,” the rating agency warns.