Moody's commenting on the situation in Italy
- Key driver of rating action was the risk of a material weakening in fiscal strength
- Had expected Five Star and Lega to form a govt over the course of this week
- New elections will likely produce similar results to the elections in March
- Sovereign rating would likely be downgraded if we were to conclude that whoever emerges as the next government will pursue fiscal policies that will be insufficient to place the public debt ratio on a sustainable, downward trajectory in the coming years
Moody's says that the abandonment of a Five Star-Lega government is not going to change their decision to review Italy's credit rating. They mention this is just an update to the situation and not a rating action.
More on that here.
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