Italy’s Rating Outlook Cut to Negative by Moody’s on Politics

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Italy’s sovereign rating outlook was lowered to negative by Moody’s Investors Service, which cited accumulated risks ranging from Russia’s war in Ukraine to the departure of Prime Minister Mario Draghi.

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(Bloomberg) — Italy’s sovereign rating outlook was lowered to negative by Moody’s Investors Service, which cited accumulated risks ranging from Russia’s war in Ukraine to the departure of Prime Minister Mario Draghi.

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The credit quality of the European nation, which is rated Baa3 by Moody’s, is under pressure by heightened government risk that could impede structural reforms — including those in Italy’s National Recovery and Resilience Plan, according to analysts Sarah Carlson and Alejandro Olivo

“Risks to Italy’s credit profile have been accumulating more recently because of the economic impact of Russia’s invasion of Ukraine and domestic political developments, both of which could have material credit implications,” analysts wrote in a Friday statement. “Significant reliance on gas for its energy exposes Italy to further cuts in supply from Russia as well as higher energy prices.”

Moody’s also cited a potential deterioration in the outlook for the country’s public accounts due to poor growth, expensive borrowing costs and potentially weaker fiscal discipline. Early elections after Draghi’s departure in July are expected to increase uncertainty.

Italy’s Rating Outlook Lowered by S&P After Draghi Departs

Italy carries a score of BBB by both Fitch Ratings and S&P Global Ratings. S&P lowered its outlook on Italy in late July.

The euro maintained its losses on Friday, falling with all of its Group-of-10 currencies against a strong dollar. Italian bond and equity markets were closed at the time of the rating announcement.

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