Italy Bond Risk Fades on ‘Game Changer’ Moody’s Outlook Boost
- Newly “stable” outlook banishes fears of downgrade to junk
- Risk premium over German peers falls to lowest since Sept. 11
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The extra yield investors demand to hold Italian bonds over safer German securities fell to the lowest level since early September, after Moody’s Investors Service pulled the nation’s credit rating back from the brink of junk.
The spread between 10-year Italian and German bonds dropped 5 basis points to 172 basis points on Monday, nearly 40 basis points below a recent peak. Moody’s, which rates Italy Baa3 — the lowest rung of investment-grade — revised its outlook on the nation’s credit rating to stable from negative.