Italy Drags down Eni Credit Rating

Rating agency, Moody's Investors Service, has had to downgrade Eni’s long-term credit rating to 'Baa1' from 'A3', with stable outlook, the Italian energy company said October 23. Moody’s also confirmed Eni’s 'P-2' short-term credit rating.

"The rating action on Eni follows the downgrade on the Italian sovereign rating to 'Baa3' from 'Baa2', with stable outlook, and reflects Moody’s view that despite the favourable prospects for the company and the expectation of strong credit metrics, the lower Italy sovereign rating results in a downgrade of Eni’s rating". Moody’s methodology allows for a maximum two notches differential between a "government-related issuer's" rating as Eni and Italy’s sovereign credit rating.

The EU rejected Italy's 2019 budget on October 23 as it required more borrowing, as a percentage of GDP, than is allowed in the eurozone. According to news agency ANSA, the European Commission said that Rome's plan to run a deficit of 2.4% of GDP next year is a major deviation from the agreed targets that could mean it breaks the Stability and Growth Pact.