KBRA Affirms BBB+/K2 Ratings for the Republic of Italy; Outlook Stable
25 Apr 2025 | Dublin
KBRA Europe (KBRA) affirms the Republic of Italy’s long-term issuer ratings of BBB+. KBRA also affirms the short-term ratings of K2. The Outlook on the long-term ratings is Stable.
| 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 affirmation of Italy’s ratings reflects its large, wealthy, and institutionally strong euro area economy, which is both advanced and highly diversified. Italy also benefits from support provided by the European Central Bank (ECB) and the European Union. The Outlook reflects a stable growth profile despite challenges such as weak external demand, geopolitical uncertainty, and elevated ECB interest rates—largely cyclical in nature. KBRA acknowledges Italy’s weak fiscal position but expects gradual improvement, albeit at a slow pace. The country has demonstrated resilience to economic challenges, though it remains vulnerable to risks arising from global trade disruptions, geopolitical tensions, and protectionist measures. However, Italy's government budget deficit is expected to narrow faster than that of some key euro area peers. KBRA also notes continued improvement in the credit fundamentals of Italian banks.
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