ITALY: Moody`s Changes Outlook on Italy`s Baa2 Issuer Rating to Negative

Thursday December 8 2016

Moody`s Investors Service has changed the outlook on Italy`s Baa2 long-term issuer rating to negative from stable. At the same time, Moody`s has affirmed Italy`s long-term senior unsecured government bond rating at Baa2 and its short-term commercial paper rating at P-2.

The drivers for the rating actions are:

• the slow and halting progress on economic and fiscal reform in Italy, the prospects for which have diminished further following the `no` vote in Sunday`s constitutional referendum; and
• the resulting rising risk that the reduction in Italy`s large debt burden will be further postponed given subdued medium-term growth prospects and recent fiscal slippage, thereby prolonging the sovereign`s exposure to unforeseen shocks.

Concurrently, Moody`s has today maintained the local-currency and foreign-currency bond ceilings at Aa2. The local-currency and foreign-currency deposit ceilings remain unchanged at Aa2. The short-term foreign-currency bond and deposit ceilings remain unchanged at P-1.

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