Moody's Investors Service on Friday raised the outlook on Italy's government bond rating to stable from negative, citing improved financial strength in the European country.
It reaffirmed Italy's bond rating at Baa2, its second-lowest investment grade.
The rating agency says that it expects the ratio of government debt to gross domestic product to level off in 2014 as economic growth modestly resumes. It pointed to Italy's strong government bond market, which is one of the largest in Europe, as an indicator of strength.
Moody's also says that that the government's balance sheet is looking less risky, citing lower risks tied to its banking sector.
The rating agency says that the recent resignation of Prime Minister Enrico Letta does not alter its expectations.