Moody’s has decided to raise the rating of the Italian public debt from Baa3 to Baa2 with a stable outlook, a historic upgrade that has not occurred since May 2002, when the second Berlusconi executive was in government and the debt/GDP ratio was 30 percentage points below the current one.
The decision, communicated late in the evening by the American agency, represents much more than a simple technical adjustment: it is the symbol of a newfound international credibility. In fact, it brings to an end an era in which BTPs occupied, only on the Moody’s scale, the last rung of securities considered safe, one step just above “non-investment grade”.
The reasons for the promotion
This promotion breaks two established traditions. The first is temporal: we had to go back 23 years to find a similar improvement. The second is methodological: Moody’s has in fact violated its usual rigidity, which would impose at least 12 months between an increase in the outlook (which occurred in May) and an actual upgrade. What convinced the agency was the trajectory of the public accounts, characterized by a primary surplus that this year reaches 0.9% of GDP and aims for 1.9% in 2028. A dynamic made possible by a deficit that will already touch 3% of GDP in 2024, to fall to 2.3% by the end of the next three years.
The current debt hump, destined to rise again to 137.4% in 2025 before starting a descent, is the result of the tax credits of the recent past, starting with the Superbonus. Precisely the decision to end that experience established a pillar of the trust gained on the markets, which look to the future more than to the past.
The early exit from the EU procedure for excessive deficits, made possible by the new budget discipline, removes the “special surveillance” cage from the Italian accounts and outlines a horizon of greater sustainability.
A record year
With this upgrade, a record year for international assessments of Italian government bonds ends, marked by seven improvements. The chain started in April with S&P Global Ratings, continued in May with the improvement of Moody’s outlook, then continued in September with Fitch and was completed with the October hat-trick of Dbrs, Kbra and Scope.
A twenty-year legacy of mistrust is thus overcome, giving way to a new phase in which Italy, despite its heavy burden of debt, rediscovers a credit that seemed lost.
Meloni: “An important result, market confidence confirmed”
Moody’s upgrade on Italy is “an important result”, which “has not happened for 23 years”. It is with these words that Prime Minister Giorgia Meloni greets the American agency’s decision to raise the rating on Italian debt from Baa3 to Baa2, the first promotion in over two decades.
This recognition rewards the serious and responsible work of our government, the result of coherent choices on the accounts and structural reforms, but also the work and commitment of our companies and our workers. I would like to particularly thank Minister Giorgetti for his constant and scrupulous effort in managing the accounts. Moody’s promotion is a confirmation of the markets’ trust not only in the government, but in Italy as a whole.
Yesterday evening it was the Minister of Economy, Giancarlo Giorgetti, who rejoiced over the decision of the American rating agency:
We are pleased with Moody’s promotion. A further confirmation of the newfound trust in this government and therefore in Italy.
