Moody’s out with another note following weekend chaos
Notable was they said recent developments have no bearing on decision to put Italy’s ratings under review for downgrade
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
Abandonment of a Five Star-Lega government is not going to change their decision to review Italy’s credit rating.
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