KBRA Affirms BBB+/K2 Ratings for the Republic of Italy; Outlook Stable
16 Aug 2024 | 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 the ratings reflects Italy’s large, wealthy, advanced, institutionally strong and diversified euro area economy that also benefits from European Central Bank (ECB) and European Union support. The Outlook reflects Italy’s benign growth profile in the context of a challenging but largely cyclical environment of weak external demand, geopolitical uncertainty and high ECB interest rates. The Outlook also considers Italy’s weak fiscal position, which KBRA believes will improve, although acknowledges consolidation will be slow. Italy has demonstrated resilience to challenges. Despite the relatively higher cost of energy and tighter financial conditions, growth has been stronger than the euro area average, while the government budget deficit should narrow faster than some key euro area peers. KBRA also notes that credit fundamentals of Italian banks have improved.
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