Fitch raises Italy's rating to 'BBB+', outlook changes to 'stable'

The air of promotion had been blowing for weeks, fuelling anticipation that the Italian rating upgrade released by Fitch late in the evening did not disappoint. The BTp today added a '+' to their triple B rating, with a stable outlook, just as they had done on 11 April on the S&P Global Ratings scale. "A lot of study, a lot of work. Serious and reserved. We have put Italy back on the right track,' Economy Minister Giancarlo Giorgetti commented.

The rise of Italian bonds comes exactly seven days after the downgrade of France (from AA- to A+, stable outlook), replicated by Dbrs (from AA(high) to AA). And it also highlights in the calendar the BTp's navigation against the main continental dynamics and shortening, at least partially, a distance from Paris that in the agencies' ratings remains higher than that suggested by the key public finance numbers, and especially their evolution.

Because the increase in the debt-to-GDP ratio in Italy today is essentially the result of the recent past dominated by the Superbonus, but the deficit is decreasing and is heading straight for that 3% of GDP quota that opens the way out of the European excessive deficit procedure (on 1 October, with the new public finance programme, it will be known whether the target will be reached this year).

The growth figures remain far from enthusiastic, but despite the spring slowdown the government is aiming to confirm the +0.6% forecast for this year, and it is not excluded that in the plan of accounts at the beginning of October it may tweak upwards the +0.8% put on the calendar for 2026. The eyes of observers, especially international ones, are looking in particular at the final year of the NRP, which, despite the remodelling expected in the coming weeks, has been accelerating its actual spending levels for the past few months, now above 3 billion a month, and should further increase its momentum in the final rush of next year.

All of this is taken into account by Fitch in its report on Friday evening, which bases its change of rating on a decline in the deficit to 3.1 per cent of GDP this year, in a dynamic "supported by structural improvements on the revenue side and tight expenditure control". In the view expressed by the agency's analysts, this development is also the result of "a stable political environment" and "continued reform momentum", which together with the "reduction in external imbalances further improve Italy's credit indicators". The combination of these factors "mitigates the risks stemming from the still high public debt and the growing external challenges", and allows BTp bonds to climb back up the triple B scale despite the fact that the other countries in the same area of the ranking show an average debt-to-GDP ratio of 57.3%, i.e. well below half of Italy's levels.