OREANDA-NEWS. This rating action commentary replaces the version published on 9 June to add the relative attribute (Strong) to the control rating factor, in the third paragraph of Key Rating Drivers.

Fitch Ratings has affirmed Poste Italiane S. p.A.'s (PI) Long-Term Issuer Default Ratings at 'BBB+' with Stable Outlook, and Short-Term IDR at 'F2'. Fitch has also affirmed the Long-and Short-Term ratings on PI's EUR2bn euro medium-term note programme (EMTN) and EUR750m bond (XS0944435121) at 'BBB+'/'F2'.

The affirmation reflects Fitch's expectations of continuing linkages with Italy's national government (BBB+/Stable), which using a top-down approach, the agency regards as sponsor under its 'Rating of Public Sector Entities Outside the United States' criteria, as well as its sound fundamentals on a standalone basis. Based on the information available, Fitch considered that even with a potential further 30% divestment, the effective control would remain in the hands of the national government, and as such, the rating factors detailed below will remain unaffected. As a consequence, the ratings were affirmed. If the divestment plan evolves in a manner that affects the rating factors, PI's ratings would possibly be affected accordingly.

KEY RATING DRIVERS

Integration: Stronger

Fitch does not expect PI's integration with Italy's national government to diminish over the medium term. The agency expects the public sector will continue to account for about nearly 80% of assets (EUR175bn in 2015 when the insurance business is also considered).

Strategic Importance: Stronger

PI funds 20% of Italy's EUR2.2trn debt, including investments in Italy's bonds by PI's subsidiary Poste Vita (BBB+/Stable) and saving accounts distributed for Cassa Depositi and Prestiti SpA (CDP; BBB+/Stable). PI is Italy's dominant operator in mail delivery - including the universal service - with nearly 85% of the market share and is the sixth largest for parcel delivery with about a 15% share. With a EUR0.6bn EBIT loss in 2015 PI's mail and parcel remain loss-making and cross-subsidised by the financial and insurance sectors.

Control: Stronger; Legal Status: Weaker

Italy listed 35% of PI shares on the Milan Stock Exchange in 2H15 as part of the national government's drive for privatisation; Fitch understands the government plans to proceed to a further 30% divestment over the medium term while allocating the remaining 35% to the balance sheet of CDP. Limits to voting rights for private investors holding more than 5% of the shares are conducive to eventually maintaining PI under the control of the national government.

RATING SENSITIVITIES

The ratings and Outlook will likely continue to reflect those of Italy over the medium term in light of the credit linkage. Negative rating action could be triggered by an unexpected deterioration of PI's profitability if Fitch concludes that income losses are reflective of weaker financial support or integration with the national government.

Weaker links with the government through further divestment, leading to state ownership actually below 50%, or PI retreating from public service functions, could lead to negative rating action or a change in the rating approach.