Italy takes center stage: a year of unprecedented promotions.

In the space of just one year, the rating landscape has changed radicallyEuropean sovereign debts, in particular with Italy which from November 2024 to November 2025 waspromotedone notch from all four major international rating agencies, while France was subject to downgrades.

Standard & Poor's and Fitch haveraisedboth ratings for Italy from BBB to BBB+, DBRS Morningstar improved it from BBB high to A low, while Moody'spromotedItaly from Baa3 to Baa2. At the same time, France was downgraded by both S&P and Fitch from AA- to A+, DBRS lowered it from AA high to AA, while Moody's reduced the French rating from Aa2 to Aa3. Therefore, if in November 2024 there were five steps of difference between the ratings of France and Italy for S&P and Fitch, six steps for DBRS and even seven steps for Moody's, at the end of November 2025, Italy has shortened its distance from France to just three steps according to S&P and Fitch, to four steps for DBRS and to five steps for Moody's. The recent judgment of the latter evaluation agency still appears excessively stingy for Italy, which has achieved enormous resultssteps forwardin the management of its public finances. At the same time, Moody's maintains a very generous rating for France, which is instead in the midst of a financial crisis and with a public debt that is growing at a gallop. Overall, there is plenty of room for moreimprovementsof Italy's rating by all agencies, in light of our evident progress. On the other hand, financial markets run much faster than sovereign ratings and now recognize a lower spread on ten-year Italian public debt securities than similar French securities.

The sovereign rating scales

For non-experts it can be difficult to understand the ratings of the various rating agencies, also because not all of them follow the same rating scales or express them in different ways. The graph shows the evolution of the ratings of Italy and France from November 2024 to November 2025. The various ratings attributed to Italy are highlighted in red, while those attributed to France are highlighted in green.

The best known rating scale is the one adopted byS&P and Fitch,which starts from a maximum rating of AAA and goes down one step at a time, each equivalent to half a point, up to the BBB level. Ratings from AAA up to BBB are considered“Investment grade”,that is, they are recognized by countriesworthy of investmentalbeit with different degrees of caution. Below the BBB level, up to the C level and above (the lower values are not depicted in the graph), the ratings are instead considered“Non-investment grade”and are attributed to risky or unreliable countries; in this case the investment in the debt securities of these countries is considered highly speculative.

It should be noted that the DBRS Agency uses the high and low signs rather than +/- as S&P and Fitch do. For example, BBB+ is written, for DBRS, as BBB high. But otherwise the scale of DBRS is also aligned with that of the other two agencies. On the other hand, Moody's scale is a little less intuitive, with ratings expressed with letters and numbers different from the other three agencies, but in reality also fully comparable.

For ease of understanding, iratingof the rating agencies can be normalized from zero to 10 by attributing 10 to the highest rating and scaling downwards by half a point for each step. For example, in the case of S&P and Fitch, AAA corresponds to 10, AA+ corresponds to 9.5, etc. The BBB+ rating attributed by S&P and Fitch to Italy in 2025 corresponds to a 6.5. The grade attributed by the same two agencies to France corresponds to an 8. The Baa2 attributed to Italy by Moody's is equivalent to a 6 on the report card, while the Aa3 attributed to France by Moody's is equivalent to an 8.5. The A low rating given by DBRS to Italy is like a 7, while the AA given to France is like a 9.

Considering this succession of values expressed in numbers starting from 10, the votes attributed today by the various agencies to Italy can be summarized as follows, from highest to lowest:DBRS 7; S&P and Fitch 6.5; Moody's 6.The scores recognized for France are instead: DBRS 9; Moody's 8.5; S&P and Fitch 8. By reshaping the ratings in this way, it is even easier to understand that DBRS issleeveextremelywidewith France, considering that it is given a 9, just one vote less than a country considered safe like Germany, which has an AAA rating. While the least generous agency towards Italy is certainly Moody's, which, despite having recently promoted our country, gives it just a 6. A final note concerns the so-called outlooks, which accompany the ratings. Outlooks can be stable, positive or negative. Normally, if a country passes or fails it is given an outlookstable. However, if a country has, for example, a BBB rating and is associated with apositive outlookit is very probable that in the next round, if he improves further, he could be promoted to BBB+. It happened, for example, to Italy in the last year with S&P and Fitch. Or, considering Moody's scale, if a country has an Aa2 rating with an outlooknegative, if it worsens it is likely to be downgraded to Aa3, as happened to France on 14 December 2024. Furthermore, if a country has a stable outlook, it is normal that before being promoted (or rejected) in terms of rating, it is simply recognized as having an improvement (or worsening) of the outlook to positive (or negative) as an intermediate step. Another fairly frequent rule is that, except in exceptional cases, it is difficult for a country to be promoted or failed twice in the space of twelve months.

The latest promotion for Italian sovereign debt from Moody's

On November 22nd, the last one finally arrivedpromotionsexpectations for Italy and its public debt, that of the Moody's agency, in a year that will certainly go down in history. In fact, as already mentioned, Italy has cashed in in 2025improvementsof its rating and its outlook by all the four most important international rating agencies, Standard & Poor's, Fitch, DBRS and, on Friday 22 November, Moody's. The agency recognized in its Report that the Italian government, under the leadership of the Minister of Economy and Finance Giancarlo Giorgetti, is reporting thedeficit/GDPof Italy below 3%, one year ahead of what was agreed with Brussels. Moody's predicts that “Italy's primary government surplus will increase further, which will support a gradual decline in the debt-to-GDP ratio from 2027 onwards.Italian debtis expectedgo downjust above 130% of GDP in 2034 compared to an estimate of 136.5% in 2025”. At that point - we add - Italian debt as a percentage of GDP will be much lower than the debts of France and the United States, not to mention Japan: an almost Copernican revolution. They are the same projections as theInternational Monetary Fundto say so (IMF, “Fiscal Monitor”, October 2025).

Moody's also justified its promotion with thepolitical stabilityand of Italy's government which "increases the ability to implement effectiveeconomic and fiscal reformsas well as implementing the investments of the PNRR". Another important factor recognized in Italy is the good performance of state revenues and the resilience of our economy, with employment constantly growing.

The importance of correct country communication to regain credibility

It is not enough to make progress but it is also important to know how to communicate it. The promotions by the rating agencies collected in the last year by our sovereign debt are based above all onfour pillars.Four strong points that are gradually convincing international markets and evaluators that our country can no longer be considered the "black sheep" of European public debt. These are four fundamental factors of our socioeconomic system that Italy, not only thanks to the Government, as is obvious, but also thanks to other institutions, has recently managed tocommunicatebest in the world and in the markets. Defeating like thisrooted clichéswhich our own self-flagellating domestic narrative has contributed to strengthening. The recovery of Italian credibility, in fact, finally occurred also through abetter communication.

The first of these pillars, which we have consolidated over the years, is theprimary state budget,that is, the annual balance sheet of our public finances before interest payments. How many know that from 1992 to 2019, before Covid, thepublic debtItalian has grown practically only due to theinterest expenseand that our primary balance sheet has always closed in the black, except during the global financial crisis of 2009? Very few people know about it in Italy, let alone abroad, where they have always imagined us as a country of spendthrifts that squanders public money. Instead it is the exact opposite. Some simple data: from 1995 (when the current internationally comparable historical series begin) until 2019, Italy generated aprimary state surpluscumulative of 764 billion current euros, higher even than that of austere Germany (598 billion), while France is in deep red (-562 billion), having its transalpine cousins produced the last positive primary balance of their history in the now very distant 2001. Furthermore, despite thepublic costsenormous expenditure supported by all the countries of the world during the pandemic, Italy, according to the European Commission, will present a negative cumulative primary state budget for "only" in 2020-2027261 billion euros,having already returned to a surplus in 2024, while Germany and France will be in deficit, respectively, for 748 and 832 billion. Over the entire period 1995-2027, Italy's cumulative primary surplus will amount to 503 billion euros, while Germany will have a deficit of 150 billion and France of 1,400 billion. All the other major advanced countries will also be in the cumulative red: Spain (-494 billion euros), the United Kingdom (-1,084 billion pounds), Japan (-548 trillion yen) and the United States (-14,340 billion dollars).

We are, therefore, the most "frugal" country around. And it was the President of the Republic Sergio Mattarella who was the first to explain it clearly in a series of meetings with various foreign presidents in recent years. Mattarella was also the first, in repeated public appearances, to demand a rating for Italymore objectiveand appropriate by the evaluating agencies.More communication,therefore, and in this case at the highest institutional level, equal promotion.

A second, more recent pillar of Italy is ourspositive financial position with foreign countries,consolidated in recent years thanks to repeated trade and tourism balance surpluses. We Italians have become net creditors towards the world, that is, the stock of our private credits today exceeds the amount of the stock of our public debt in foreign hands. Italy is the only large Mediterranean country with a positive net international investment position, 282 billion euros in the first quarter of 2025, while France (-825 billion), Spain (-772 billion), Greece (-339 billion) and Portugal (-172 billion) instead have a negative international investment position. We now resemble, in this respect, Nordic countries such as Germany or the Netherlands. It was Governor Fabio Panetta, on the occasion of the 2024 Assembly of the Bank of Italy, who was the first toemphasizepublicly this element of ourssolidity,priorly little known, which since then has appeared as if by "magic" in all rating agency reports. Again: more communication equals promotion.

The third pillar that is now recognized is theresilience of the Italian economy, which manifests itself in several aspects, including: 1) a strong recovery in GDP after Covid, the highest among the European G7 countries and also compared to Japan; that is to say that Italy is no longer the "ladder" in growth, despite the slowdown of the last two quarters; 2) an exceptional onediversification of our exportsin terms of products and markets, with Italian exports overtaking Japanese exports in the first seven months of 2025; 3) a solid banking system; 4) a very large capacity for direct "self-financing" of public debt by families (mainly) and businesses, with the Italian non-financial private sector, a unique case in Europe, which now holds 442 billion of our public debt, almost 20% in points of GDP; that is to say that theItalian debt/GDP,net of this component,is lower,now than that of France. These and other significant strengths of the Italian economy were brought to general attention by the Confindustria Study Center (CsC) with a study entitled "Unveiling Italy's Economic Potential. A Perspective on a Dynamic and Resilient Economy", which Confindustria, under the guidance of vice-president Lucia Aleotti, presented to all the rating agencies over the last year, intensifying the meetings traditionally held by the CsC with them. In particular, a Confindustria delegation met with Moody's managers for sovereign debt in London on 27 March. Let's repeat once again:more communication equals promotion.

Finally, the fourth pillar underlying the promotions of our rating is thepolitical and government stabilitycurrent in Italy. The world was used to seeing an Italy that changed one prime minister after another after another, every few months or quarters. A long-lived and stable government like the current one helps greatly to convince observers and markets that Italy's economic policy lines can have the necessarycontinuityto producetangible results.Results that everyone has already been able to appreciate not only in terms of public finance discipline but also in terms of the realization of PNRR investments.