Moody's affirms Italy Baa2 lgterm issuer......>

ITALY: Moody's affirms Italy Baa2 lgterm issuer rtngs, negative outlk; affirmed

Italy sr unsec bond and MTN program rtgs at Baa2/(P)Baa2; Commercial Paper and

other short- term ratings affirmed at Prime-2/(P)P-2; affirmed (P)Baa2, sr

unsecured shelf."

- Moody's said 1) govt "managed to stabilize the bkng sector. While restoring

the sector to health will take time, the tail risk of a deeper bkng crisis with

significant impact on the sovereign's balance sheet has been reduced with the

govt's actions on the weakest bks earlier this yr;"

- 2) "Italian econ. is currently seeing stronger growth, after 6 yrs of very

weak outturns, with the recovery now being increasingly broad-based." Moody's

feels "nr-term outlk for growth is now stronger" than "expected earlier," wh/

"shd help to stabilize public finances and prevent a further increase in the

public debt ratio over the coming yrs."

- It said "downside risks" remain "elevated, leading the rtg agency to maintain

the negative outlook on the Baa2 rating. Despite the recent improvement, Italy's

growth prospects are likely to remain moderate over the medium-term."