Spreads To Bunds Little Changed After Scope Acceptance

No meaningful reaction from the 10-year BTP/Bund spread as the ECB announces it will accept Scope Ratings within the Eurosystem framework, alongside S&P, Moody's, Fitch and DBRS Morningstar.

• Scope is scheduled to review Italy's credit rating on December 1, the last of the five main ratings agencies to do so in 2023 (Fitch is after hours today and Moody's is on 17 Nov). However, since Scope already rates Italy higher than S&P, Fitch and Moody's it would likely require a multi-notch downgrade to below investment grade to see any significant market reaction.
• There has been increasing speculation that Italy may lose its IG status with one of the main ratings agencies in the latest round of reviews (especially at Moody's where Italy is just one notch above junk status). So far, S&P and DBRS have maintained existing ratings (with the latter revising the L-T trend to stable from negative).
• Italy is currently rated BBB/A-2 (Outlook stable) at S&P; BBB-high (Outlook stable) at DBRS; BBB (Outlook stable) at Fitch, Baa3 (Outlook negative) at Moody's; BBB+ (Outlook stable) at Scope.
• The BTP/Bund spread currently sits 0.4bps wider on the day at 187.1bps, as EGBs remain weaker following previously-noted moves after hours in the US.
• From the press release: "The integration process of Scope Ratings into the Eurosystem IT infrastructure will be initiated immediately and is likely to take several months. The go-live date of Scope Ratings’ usability for monetary policy purposes will be pre-announced on the ECB’s website".