Will the increase in Italy’s public debt trigger a downgrade?

Italy has been hit hard by the pandemic . Measures put in place to contain the virus have have brought broad parts of the econom y to a sudden halt. The government has committed significant resources to soften the blow as much as possible for companies and the most vulnerable households. Other fiscal measures combined with the effect of the recession under way will inevitably lead to a sharp widening of the fiscal deficit and, as a result, to an increase in public debt. As public debt is already at a very high level, investors are questioning its s ustainability and the risk of a downgrade to Italy’s credit rating by the agencies. We believe that despite the fragility of the Italian economy, this will not happen in the short term. For th is year at least rating agencies are likely to maintain the status quo and, in any event, not downgrade Italy’s rating below the i nvestment -g rade status .