Moody's raises Italy's rating outlook amid fiscal progress

Moody's upgraded Italy's credit outlook to “positive” on Friday, indicating a possible future rating upgrade. The country remains at Baa3, just one notch above “junk” status. However, improvements in fiscal policy under Prime Minister Giorgia Meloni have bolstered investor confidence. Moody's cited the country's stronger-than-expected budget data for 2024 and a stable political climate as factors supporting economic progress. This was reported by Bloomberg.

The agency pointed out that S&P Global Ratings had surprisingly upgraded Italy's credit assessment back in April. Both Fitch Ratings and DBRS Morningstar indicated the eurozone’s third-largest economy’s sovereign grade could be raised in coming reviews. Meanwhile, Scope Ratings maintained the country’s credit rating at BBB+ on Friday, leaving it three notches above “junk” status.

The yield gap between Italian and German 10-year bonds, a key indicator of risk, narrowed to about 100 basis points this week. That's half of what it was in 2022, when Giorgia Meloni took office as Italy's Prime Minister, as noted by Bloomberg.