Moody's promotes Italy: rating raised after 23 years

Moody's has also decided to raise its rating on Italian public debt, raising it to Baa2 (from Baa3) with a stable outlook. The news might seem usual by now, after the six promotions already obtained by BTp bonds this year, but the choice announced late in the evening by the American agency has two particularities that give it a 'historic' flavour.

First of all, to encounter a Moody's upgrade on Italy again, one has to go all the way back to May 2002, when the second government of the then 66-year-old Silvio Berlusconi had been in office for less than a year and the public debt was around 106% of GDP, 30 points below current levels. Yesterday's upgrade also breaks a solid tradition, according to which Moody's allows at least 12 months to elapse between upgrades in a country's debt rating, since back in May the outlook was raised from stable to positive.

So much, however, has the budget discipline carried out so far by the government been able to do, even at the cost of forcing Economy Minister Giorgetti to hold a flurry of majority summits on the manoeuvre in order to reach an agreement on the meagre margins available for party amendments. The effort, however, appears to have paid off well for the holder of the Italian accounts: 'We are satisfied with Moodys' promotion,' Giorgetti put on record hotly, pointing out that it was 'the first after 23 years. A further confirmation of the renewed confidence in this government and therefore in Italy'.

It was precisely the agency's habitual rigidity in avoiding chain upward adjustments that had so far dampened hopes of an upgrade this time round, even though the comparisons carried on until the last few days between American analysts and the Ministry of the Economy's top management seemed likely to go in this direction. What convinced Moody's was the trajectory of Italy's budgets, characterised by a primary surplus that, after having reappeared in 2024, reaches 0.9% of GDP this year (20 billion) and aims for 1.9% (46.5 billion) in 2028. This dynamic, made possible by a deficit that already this year will remain a whisker below 3% of GDP and is seen falling to 2.3% at the end of the next three-year period, is indispensable to keep the course of a debt that is still growing next year, at 137.4% of GDP, before a descent that after a timid start in 2027 should become more intense the following year, bringing the ratio to 136.4%.

But the current hump in Italy's liabilities is the result of the tax credits of the recent past, starting with that Superbonus that the government has decided to close by fixing in this way a pillar of trust won on the international markets: which are looking to the near future more than to the past, and therefore appreciate above all the early exit from the EU procedure for excessive deficits that removes the cage of special surveillance from the Italian accounts.