Moody's kept Italy's debt rating unchanged at a low Baa2 investment grade Friday but improved its outlook from negative to stable as the country moved to choose a new premier.
The ratings agency cited the "resilience" of government finances despite Italy's high debt and the tough challenges facing the country's economy.
The update was scheduled weeks before and not directly related to the political tumult in the country, with embattled Enrico Letta resigning as prime minister, opening the way for his expected successor, leftist leader Matteo Renzi.
Moody's said that even though Italy carries the eurozone's second highest debt load after Greece, it expects that burden to peak at below 135 percent of gross domestic product this year and hold steady as the economy begins to grow again.
In addition, Moody's said, the government can still manage its debt service at a tolerable 11.3 percent of government revenue because of the relatively low cost of its debt.
The ratings agency also cited a reduction of the risks from potential government liabilities like banks needing recapitalization.
"Today's resignation of Prime Minister Enrico Letta and the expectation that Matteo Renzi will head a newly formed government does not alter Moody's expectations in this respect," it said.
Moody’s kept Italy’s debt rating unchanged at a low Baa2 investment grade Friday but improved its outlook from negative to stable as the country moved to choose a new premier.
The ratings agency cited the “resilience” of government finances despite Italy’s high debt and the tough challenges facing the country’s economy.
The update was scheduled weeks before and not directly related to the political tumult in the country, with embattled Enrico Letta resigning as prime minister, opening the way for his expected successor, leftist leader Matteo Renzi.
Moody’s said that even though Italy carries the eurozone’s second highest debt load after Greece, it expects that burden to peak at below 135 percent of gross domestic product this year and hold steady as the economy begins to grow again.
In addition, Moody’s said, the government can still manage its debt service at a tolerable 11.3 percent of government revenue because of the relatively low cost of its debt.
The ratings agency also cited a reduction of the risks from potential government liabilities like banks needing recapitalization.
“Today’s resignation of Prime Minister Enrico Letta and the expectation that Matteo Renzi will head a newly formed government does not alter Moody’s expectations in this respect,” it said.
