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Bond Market News
Italy Upgraded to Baa2 by Moody’s, Its First Since 2002
November 24, 2025
Italy has been upgraded by a notch to Baa2 from Baa3 by Moody’s. This was its first upgrade from Moody’s in more than 23 years. The upgrade reflects Italy’s sustained political and policy stability, which has strengthened implementation of economic reforms and investments under the National Recovery and Resilience Plan (NRRP). Moody’s expects further policy progress beyond the plan’s August 2026 deadline, supporting medium-term growth and fiscal consolidation. Italy is performing well on NRRP milestones and is on track to fully absorb €194.4bn ($223.9bn) in EU grants and loans. Although project execution has faced bottlenecks, public investment is rising and is expected to remain above 3.5% of GDP through 2028. Strong banks, healthy private-sector balance sheets, and a solid external position add to economic resilience, partially offsetting demographic pressures from an ageing population. On the fiscal side, tax collection has improved meaningfully due to structural reforms, with tax revenues growing faster than nominal GDP. Moody’s expects continued fiscal consolidation and rising primary surpluses, enabling government debt to decline gradually from 2027, although the debt burden will remain high and interest costs will rise as older debt refinances at higher rates.
Italy’s bonds traded stable with its EUR 3.35% 2035s at 100.3, yielding 3.33%.
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