It hasn't happened for almost a quarter of a century: after a long series of rejections or simple confirmations, this time the severe rating agency Moody's has raised its rating on Italy's sovereign debt, bringing it from Baa3, which is the lowest level of investment grade, to Baa2Our country's outlook has changed from positive to stable. "We are pleased with Moody's upgrade, the first in 23 years. This further confirms the renewed confidence in this government and therefore in Italy," commented Economy Minister Giancarlo Giorgetti.
The reasons: "Stability and government action are good."
Moody's motivated the rise of Italy's rating to Baa2 as follows: “The rating improvement reflects a coherent path to stability and policy decisions that improve the effectiveness of economic and fiscal reforms and investments through the PNRR." The US rating agency also looks "at the prospect of further policy actions to support growth and fiscal consolidation beyond the 2026 deadline" of the PNRR - it says - expecting debt to decline from 2027 onwards. The stable outlook balances the possibility of reforms that "could improve Italy's growth prospects", but also of the fact that “the reduction in debt depends on robust growth and increasing primary deficits”.
"Given that fiscal space has been created by containing current spending and increasing revenues, we consider these investments likely," Moody's wrote, referring to the draft budget's forecast for public investment to remain above 3,5% of GDP for the period 2026-2028. A sustained level of public investment "will improve Italy's credit profile through infrastructure and competitiveness, and support economic growth." Among the uncertainties surrounding economic growth, demand for BTPs and debt securities remains solidAfter the rating upgrades by Standard & Poor's in the spring and Fitch in October, this time it was Moody's turn.
