Moody's completes Italy review, no action on ratings. The updated situation

There is no change in Italy's rating. Moody's has completed the revision of its rating on Italy, and will not make any action on our rating. Moody's expects Italy's growth to 'remain moderate below 1 per cent this year' as a result of 'weak domestic and export demand' due to Germany's deceleration. The rating agency announced the complete revision of Italy's rating, which, it points out, "is not a rating action and is not an indication" of future rating decisions. Italy currently has a Baa3 rating with a stable outlook.

After S&P Global Ratings, Fitch and Dbrs that updated their ratings at the end of October, the cycle of revisions that came after the Italian government presented the 2025 budget law comes to an end. The agencies assess the reliability of public accounts and the soundness of the Italian economy in the international context dominated by the geopolitical uncertainty of the two wars and trade tensions especially between Europe and China. Moody's is currently the agency that maintains the lowest rating on Italian bonds, at the Baa3 level and stable outlook, the lowest of the investment grade ratings, i.e. one step away from bonds considered junk. Here are the ratings of the other agencies.

On 18 October S&Pconfirmed Italy's rating BB with a stable outlook. The agency spoke of Italy's "rosy GDP growth prospects", with the economy expected to grow by around 1% in the 2024-2025 period compared to 0.2% in the pre-pandemic decade. The biggest challenge for Italy remains the high debt. "At 135% of GDP in 2024 it is among the highest" and moving towards 138% in 2027. This is worrying 'because it limits the government's ability to make growth-enhancing investments', the rating agency noted, explaining that the increase in debt is mainly weighed by adjustments related to the Superbonus.

On the same day in October, the Fitch report card also arrived: the US agency confirmed the BB rating but raised the outlook from stable to positive. The positive outlook, was the reason for the rating, reflects the recent stronger fiscal performance and commitment to European rules. 'This is reinforced by signs of stronger potential growth and a more stable policy environment,' the agency added, referring to a 'credible fiscal plan' and a 'stable political situation'.

On 25 October Dbrs Morningstar reaffirmed the BB (high) rating for Italy and raised it to positive from stable. The revision, the Canadian agency explained, is 'linked to an improved medium-term fiscal trajectory that mitigates the risks associated with public debt, which remains high'. Dbrs deemed Italy's medium-term structural budget plan 'credible' but also stressed that the improvement in the fiscal position is based on the permanent nature of higher revenues and sustained fiscal adjustment over a prolonged period. The agency highlighted that the coalition currently in power appears 'more stable than previous governments' and presented a 'responsible' psb.