Posted on November 20, 2023 at 9:35 am
Nov 20 (Reuters) – The risk premium required by investors to hold Italian and Portuguese sovereign debt fell slightly on Monday, in a sign of some relief, following ratings agency Moody’s decisions on those two countries.
Moody’s on Friday kept Italy’s sovereign debt rating at Baa3 – one notch above junk – and raised its outlook from negative to stable. However, most analysts did not expect Moody’s to lower its forecasts, and some even expected an improvement.
The rating agency also raised Portugal’s long-term bond rating by two notches, from Baa2 to A3, despite the political crisis caused by the resignation of Portuguese Prime Minister António Costa two weeks ago.
The yield spread between Italian and German 10-year bonds – an indicator of how investors perceive risks on Italy’s debt – fell to a new two-month low of 171 on Monday, 0.4 basis points.
At approximately 08:25 GMT, this gap reached 172.7 points, compared to 172 on Friday, the lowest level since September 21. A week ago it was still around 185 pips.
The spread between Portuguese and German 10-year bond yields fell by two basis points to 58.7 points. (Reporting by Stefano Ribaudo, French version by Claude Chendjo, Editing by Kate Entringer)