ROME - Rating agency Fitch cut Italy’s credit rating to “BBB-minus” on Tuesday, just one notch above junk, saying the downgrade reflects the impact of the coronavirus pandemic on the euro zone’s third largest economy.
The agency said that in line with its policies, Italy had appealed against its decision and “provided additional information that resulted in a rating action that is different than the original rating committee outcome.”Fitch changed Italy's outlook to stable from negative, saying it sees the European Central Bank's net asset purchases helping Italy's fiscal response to the COVID-19 pandemic.
Italy’s debt ratio is the second highest in the euro zone after Greece, and the agency’s forecast for this year is broadly in line with the 155.7% targeted by the government of the anti-establishment 5-Star Movement and the centre-left Democratic Party. Italian Economy Minister Roberto Gualtieri said Fitch had failed to take account of important decisions taken by the European Union and the European Central Bank to support the economies of the euro zone and its members.The ECB has launched a 750 billion euro Pandemic Emergency Purchase Programme which has helped keep a lid on Italian bond yields, while the EU has agreed to set up a jointly funded “Recovery Fund,” the details of which remain to be defined.