KBRA Affirms BBB/K2 Ratings for the Republic of Italy; Outlook Revised to Positive
29 Sep 2023 | 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 has been revised to Positive from 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 the ratings reflects Italy’s large, wealthy, advanced, institutionally strong and diversified euro area economy, that also benefits from European Central Bank and European Union support. The Positive Outlook balances Italy’s potential for stronger growth over the medium-term that should help bolster government finances. The path to post-pandemic fiscal repair has met headwinds due to the deteriorating geopolitical and macroeconomic environment since Russia’s invasion of Ukraine, elevated inflation, energy subsidies, and higher financing costs due to rate hikes. Notwithstanding the slower fiscal consolidation, it has still been constructive, and progress is expected to be enhanced in a faster growth environment that seems achievable over the medium-term as reflected in a meaningfully higher investment rate, while not imperiling external finances.
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