Moody’s downgrades Italy

Moody's Investors Service said it downgraded Italy's local and foreign-currency issuer ratings to Baa3 from Baa2.

The outlook was changed to stable.

This concludes the review initiated on May 25.

Moody's also downgraded to Baa3 from Baa2 the local and foreign-currency senior unsecured bond ratings.

The outlook is stable.

The agency said the downgrade reflects a material weakening in Italy's fiscal strength, with the government targeting higher budget deficits for the coming years than Moody's previously assumed.

Italy's public debt ratio will likely stabilize close to the current 130% of GDP in the coming years, rather than start trending down as previously expected, the agency said.

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