MILAN Feb 14 Moody's has lifted its outlook on
Italy's "Baa2" government rating to stable from negative,
signalling a possible change in sentiment towards the country's
sovereign debt since the start of the euro zone crisis.
In a statement on Friday, the ratings agency said the
outlook change reflected the resilience of Italy's government
financial strength as well the reduction of risks for Italian
government's balance sheet stemming from contingent liabilities.
Moody's expects Italy's debt-to-GDP ratio to peak this year
at below 135 percent and said Prime Minister Enrico Letta's
resignation and expectations that centre-left leader Matteo
Renzi will head a new government does not change its
Moody's said the risks related to the Italian banking
sector's potential recapitalisation needs are now more limited
and said it may upgrade Italy's rating if the economy improves
on the back of structural and labour market reforms.
Renzi could be named prime minister as soon as this weekend
after his centre-left Democratic Party (PD) leadership forced
party rival Letta to resign after 10 months in power.
(Reporting by Danilo Masoni, editing by Lisa Jucca)