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Moody's raises outlook on Italy debt rating to 'stable'

Moody's Investors Service raised its outlook on Italy's Baa2 sovereign debt rating to "stable" from "negative" on Friday, citing the country's financial strength and reduced balance sheet risks.

Moody's also specifically noted that its upgrade was despite turmoil in the country's government.

"Today's resignation of Prime Minister Enrico Letta and the expectation that MatteoRenzi will head a newly formed government does not alter Moody's expectationsin this respect," the firm said in a note.

Moody's also said more reforms would be a further positive.

"Moody's would consider upgrading Italy's government bond rating if there is an effective strengthening of the economy's growth prospects triggered by the successful implementation of economic and labour market reforms," it said.

Italy's 10-year bonds were largely unchanged on the move.

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