...Examples of Floors/Caps: In Italy, over 65% of LRGs are capped by the sovereign IDR given its current relatively low investment-grade level. In Germany, the existence of a ratings floor means that some Laender have a higher IDR than their Intrinsic Credit Profile (ICP) would suggest that they merit. In Spain, there are both caps and floors: some cities have a higher ICP than their present IDR but are capped by the sovereign rating, while some autonomous communities have a ratings floor of `BBB-' that lifts their IDR above their ICP. Criteria Limitations: Fitch Ratings' International Local and Regional Governments Rating Criteria report (see Related Criteria) sets out the five factors the agency considers when assigning ratings to a local and regional government (LRG), one of which is the institutional framework. Under our criteria, LRGs are normally capped by the sovereign IDR, unless specific circumstances allow otherwise. When the sovereign faces downward rating pressure, this can result...
