Italy. Moody’s Confirms Rating And Improves Outlook

After a sensational downgrade of the outlook for the United States to “negative,” the international rating agency Moody’s confirmed on Friday, November 17, Italy’s rating at Baa3, the lowest among investment grade ratings. However, the country’s outlook was upgraded from “negative” to “stable.” Thus, Moody’s decision removed a critical factor that could put pressure on Italian government bonds.

In a statement accompanying the conclusion, Moody’s analysts explained that the decision to improve the outlook reflects “the stabilization of Italy’s economic outlook, the health of the banking sector, and the dynamics of public debt.”

The Italian government of Prime Minister Georgia Meloni could breathe a sigh of relief: if Moody’s had decided to downgrade the rating again, it would have taken Italy to the so-called “junk” level, which many consider more speculative.

Italian media noted that in the past, “Moody’s decided to downgrade the outlook from stable to negative shortly after the fall of the Draghi government in July 2022, making the risk of a collapse on government debt tangible.”

As Moody’s positive verdict was released late Friday, multi-year treasuries (BTP) ended the session without any shocks. Thus, the “autumn season” of ratings has ended, and the next decision on Italian public debt is due in the spring of 2024.

“I welcome the decision taken this evening with great satisfaction. This serves confirmation that, despite many difficulties, we are working well for the future of Italy.” Such were the comments to reporters by Italian Economy Minister Giancarlo Giorgetti on Moody’s decision. “In light of the views expressed by Moody’s and other rating agencies, we hope that the government’s reasonable, responsible, and serious fiscal policy, despite legitimate criticism of the democratic system, will also be confirmed by Parliament,” the Italian minister emphasized.