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Fitch downgrades Credem's short-term issuer default rating

Fitch Ratings on May 31 downgraded Credito Emiliano SpA's short-term issuer default rating to F3 from F2, resolving the under criteria observation status on the rating.

The agency also affirmed the Italian bank's BBB long-term issuer default and bank deposit ratings, "bbb" viability rating, 5 support rating, No Floor support rating floor and BBB(dcr) derivative counterparty rating.

The downgrade reflects the agency's assessment that Credem's funding and liquidity is below the level required at the F2 rating level under its short-term ratings criteria. The affirmations reflect the bank's adequate capitalization, stable funding and more stringent risk appetite compared to domestic peers, as well as Fitch's view that while external support for Credem is possible, it cannot be relied upon.

The outlook on the bank's long-term issuer default rating is negative, which reflects the agency's view that the bank should not be rated above Italy's BBB/negative sovereign rating due to the sensitivity of the bank's performance, asset quality and funding costs to the country's operating environment. Furthermore, the negative outlook takes into account the bank's direct exposure to Italy's sovereign debt.