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17 Feb 2014
Italy's outlook to stable from negative - Moody's
FXStreet (Bali) - After the New York close last Friday, Moody’s rating agency decided to change Italy's outlook to stable from negative, while re-affirming its sovereign debt at Baa2, adding that Letta’s resignation as Italian PM and expectations that Renzi will be the new PM doesn’t alter its rating view.
Moody's official report
The key drivers for changing the rating outlook to stable are:
1 - The resilience of Italy’s government financial strength. This is reflected in (i) Moody’s expectations of a levelling-off of Italy’s general government debt-to-GDP ratio in 2014; and (ii) the country’s robust debt-affordability profile, which is underpinned by low funding costs by historical standards, and a largely stable ratio of interest payments-to-general government revenues throughout the euro area debt crisis.
2 - The reduction of the risks for the Italian government’s balance sheet related to contingent liabilities from (i) the potential recapitalisation needs of Italian banks; and (ii) loans by the European Financial Stability Facility (EFSF, Aa1 negative) and the European Stability Mechanism (ESM, Aa1 negative) provided to euro area countries under an EU/IMF support programme.
Moody's official report
The key drivers for changing the rating outlook to stable are:
1 - The resilience of Italy’s government financial strength. This is reflected in (i) Moody’s expectations of a levelling-off of Italy’s general government debt-to-GDP ratio in 2014; and (ii) the country’s robust debt-affordability profile, which is underpinned by low funding costs by historical standards, and a largely stable ratio of interest payments-to-general government revenues throughout the euro area debt crisis.
2 - The reduction of the risks for the Italian government’s balance sheet related to contingent liabilities from (i) the potential recapitalisation needs of Italian banks; and (ii) loans by the European Financial Stability Facility (EFSF, Aa1 negative) and the European Stability Mechanism (ESM, Aa1 negative) provided to euro area countries under an EU/IMF support programme.