OREANDA-NEWS. October 13, 2015. The upcoming sale of 40% of Poste Italiane (PI) will not change the company's rating because Fitch Ratings does not think it will alter PI's importance to, or relationship with, the Italian government.

We view the Italian national government as PI's sponsor under our Public-Sector Entities Criteria, and believe extraordinary support will remain highly probable if needed. PI's strategic importance and its integration with the national government, as well as the latter's high degree of control and oversight will remain even after the sale.

PI has a strategic role in providing domestic postal services and in public funding policy. It invests deposits collected by its BancoPosta division in Italian government bonds. Its insurance subsidiary, Poste Vita, is also a large government bond investor. PI collects state-guaranteed savings on behalf of Cassa Depositi e Prestiti, which are largely deposited into the national treasury and partly used to fund local authorities and projects of national importance. It is also central to Italy's payments system through its post office network.

We do not think that divestment will lead to changes in control of PI. Employees are being encouraged to buy shares, and the Ministry of Economy and Finance will keep the right to appoint a majority of board members, thereby controlling major operating decisions. PI is subject to the public sector auditor and reports regularly to parliament, and its postal, insurance and financial activities are regulated by the relevant Italian authorities.

PI will remain credit-linked to the national government after the sale, enabling us to use the top-down approach to rating public sector entities set out in our criteria. Public-sector entities credit-linked to their sponsor can be rated up to three notches lower than the sponsor's rating. The high degree of integration, strategic importance and government control translates into PI's rating being aligned with that of Italy (BBB+/Stable).

PI's ratings and Outlook are therefore likely to continue to reflect those of Italy over the medium term. But the notching under the top-down approach could change if PI's profitability and debt coverage deteriorated materially. This appears unlikely as growth in insurance revenues and transaction banking offset the decline in postal services.

Weaker links with the government via divestment of more than 50%, or PI pulling back from public service functions could lead to a rating change or potentially a shift to the "bottom-up" rating approach. Under this approach, extraordinary support is possible rather than highly likely, and the rating is based on the issuer's standalone credit profile, with a possible three-notch uplift.