Economics
Italy Cut to One Step Above Junk by Moody's in Wake of Bond Rout
- Debt is seen remaining close to current level of 130% of GDP
- Moody’s sees higher budget deficits than the government does
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Italy’s credit rating was cut by Moody’s Investors Service to one level above junk on concerns about the nation’s fiscal strength and the stalling of plans for structural reform.
The credit score was lowered one level to Baa3 and the outlook was shifted to stable. The move comes amid growing tensions about the country’s budget situation which has helped fuel a sell-off in local debt. Italian bonds plunged this week amid a tussle with European Union officials over its draft budgetary plan and the execution of a debt-exchange operation, with the yield premium for Italian debt over German bonds climbing to levels unseen since 2013.