KBRA Upgrades Republic of Italy's Long-Term Ratings to BBB+; Outlook Revised to Stable
16 Feb 2024 | Dublin
KBRA Europe (KBRA) upgrades the long-term ratings of the Republic of Italy to BBB+. KBRA affirms the short-term ratings at K2. The Outlook on the long-term ratings was revised to Stable following the upgrade
| This credit rating is an unsolicited credit rating | |
|---|---|
| With Rated Entity or Related Third-Party Participation | Yes |
| With Access to Internal Documents | No |
| With Access to Management | Yes |
The upgrade of the long-term ratings reflects Italy’s resilient economic growth, which has outperformed the euro area average, despite successive external shocks and economic headwinds. Italy has successfully renegotiated its Recovery and Resilience Facility (RRF) plan with the European Commission and continues to unlock European funding and to meet its respective targets and milestones. KBRA expects that Italy’s ability to ignite faster paced growth should be abetted by this RRF funding, which aims to restructure, green and digitalise the economy. Notably, Italy’s investment and productivity rates have risen in recent years, boding for improved macro prospects. KBRA also notes that credit fundamentals of Italian banks have improved. Fiscal consolidation has been demonstrated despite meeting headwinds, largely stemming from the war in Ukraine, which subsequently led to an energy and cost-of-living crisis. Italy’s large public debt, slow consolidation of public finances, and still-weak growth weigh down the credit rating with the high interest rate environment dampening progress.
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