Moody's downgrades Italy's rating to Baa3 amid material weakening in fiscal strength - Reuters

Eren Sengezer FXStreet

Moody's Ratings recently announced its decision to cut Italy's rating to Baa3 while keeping the outlook stable.

Key quotes (via Reuters)

A key driver for downgrade of Italy's ratings to Baa3 is a material weakening in Italy's fiscal strength.
Italy's ratings downgrade also due to negative implications for medium-term growth of stalling of plans for structural economic & fiscal reforms.
Italy's foreign and local currency bond and deposit ceilings were lowered to aa3 from the previous aa2.
Italy's short-term foreign-currency bond and deposit ceilings were unchanged at prime-1.
Italy's fiscal & economic policy plans "do not comprise a coherent agenda of reforms".
Italy still exhibits important credit strengths that balance weakening fiscal prospects.
Most of Italian government's spending increases are structural in nature, implying that they will be difficult to reverse.
Italy's high debt level severely limits authorities' ability to use fiscal policy to cushion any future economic downturn.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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