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

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 

REUTERS SHOWCASE

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Leisure Riding

Leisure Riding

Harley-Davidson woos affluent young Indians with bike culture  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

Reuters India Mobile

Reuters India Mobile

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