Moody's keeps Italy rating stable, but outlook negative

MILAN Sat Apr 27, 2013 3:19am IST

Trucks are parked at the Gioia Tauro commercial harbour November 8, 2012. REUTERS/Alessandro Bianchi

Trucks are parked at the Gioia Tauro commercial harbour November 8, 2012.

Credit: Reuters/Alessandro Bianchi

MILAN (Reuters) - Ratings agency Moody's said on Friday it had kept Italy's sovereign debt rating at Baa2 thanks to the country's reasonably low current cost of funding and its primary surplus.

But Moody's maintained its negative outlook for Italian sovereign debt because of prolonged economic crisis.

Markets had feared a round of credit downgrades after ratings agency Fitch cut Italy's credit rating at the beginning of March amid political deadlock in Rome.

"The first factor underpinning the negative outlook is Moody's view that Italy's medium-term growth rate will continue to be anemic as a result of the growing risk that the current recession will extend beyond the first half of 2013," Moody's said in a statement.

The agency slashed its economic forecasts for Italy. It now expects the economy to contract by 1.8 percent from a previous forecast of 1.0 percent and predicts economic expansion will be a mere 0.2 percent in 2014.

Moody's said current low funding costs for Italy are buying the country some time in which it needed to implement structural reforms. However, it said prospects of these reforms being actually carried out were poor in the current political context.

Inconclusive elections at the end of February have produced a parliament split among three main litigious political forces. Prime minister-designate Enrico Letta is trying to form a government backed by a broad parliamentary coalition.

Letta could announce a new government as early as Saturday, political sources told Reuters.

(Reporting by Lisa Jucca; editing by Andrew Roche)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Healthcare Corruption

REUTERS SHOWCASE

Deal Talk

Deal Talk

Exclusive - Lupin, U.S. firms weigh bids for GSK's mature drugs: sources  Full Article 

Relief For Sahara

Relief For Sahara

Supreme Court could allow Sahara boss to conduct asset sale talks, company says.  Full Article 

Classifying Banks

Classifying Banks

RBI to start announcing too-big-to-fail banks in Aug 2015  Full Article 

Food Scandal

Food Scandal

Starbucks, Burger King dragged in as China food scandal spreads.  Full Article 

Bigger iPhones

Bigger iPhones

Apple asks suppliers to produce up to 80 mln large-screen iPhones - WSJ.  Full Article 

Wholesale Biz

Wholesale Biz

Wal-Mart adds $102.9 million in Indian wholesale business in June.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage