Bloomberg News

Italy Downgrade Rules Out Bonds From FSA Buffer, JPMorgan Says

October 10, 2011

Oct. 10 (Bloomberg) -- Italy’s credit downgrade by Fitch Ratings means the bonds will no longer be eligible for inclusion in the liquidity asset buffer required by the U.K. Financial Services Authority, JPMorgan Chase & Co. said.

“The FSA requires from certain firms, including branches of foreign banks, to hold a liquidity buffer of high-quality, unencumbered assets with credit rating of AA or above,” Nikolaos Panigirtzoglou, a global-markets strategist in London, wrote in an investor report on Oct. 7. “Belgium is the obvious beneficiary, as it is the next cheapest paper that can be used for the FSA’s liquidity buffer. The impact should be limited, as bank treasuries have been largely anticipating this downgrade.”

Fitch cut Italy’s credit rating to A+ from AA- on Oct. 7. The nation is graded A2 with Moody’s Investors Service and A with Standard & Poor’s.

To contact the reporter on this story: Paul Dobson in London at

To contact the editor responsible for this story: Daniel Tilles at

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