Moody’s chooses the most direct formula to launch the warning to the new majority: “we will probably downgrade Italy’s rating if we were to anticipate a weakening of growth prospects due to the lack of implementation of the reforms” linked to the NRP. And in the case of Moody’s, it should be remembered, a downgrade would bring the Italian debt into the “non investment grade” (junk) area, which closes the purchases of Italian securities by many institutional investors.
Truce over
The indication, dry, arrives in the late morning, rather unexpected in terms and tones. Only last Friday, September 30, the agency avoided updating its judgment on the Italian debt, as foreseen by the calendar, to avoid a close doubling of the coup launched at the beginning of August with the lowering of the outlook from stable to negative. But the truce did not last long, and promises to be the starter of a complex rating season that will see the judgment of all the major agencies in the coming weeks. It starts on 21 October with S&P Global Ratings
The growth of the debt
They would also be negative for the rating, according to Moody’s, “signs of probable debt growth in a significant way, either due to substantially weaker growth prospects, or due to an increase in interest costs or a decisive fiscal easing” . Fiscal and / or economic policies that weaken market sentiment and cause debt levels to rise over the medium term would also lead to downward pressure on ratings.