Moody’s rating agency might lower Italy’s rating due to financial plans of new government and risks that previous measures, including pension reforms, will be changed, Bloomberg reports.

Despite the fact that some initial proposals of coalition parties were modified, the final agreement will result in weakening of the country’s financial position, Moody’s said.

Until now Moody’s assumed that deficit will be reduced, that in turn will allow for gradual decrease in public debt.

At the end of March the public debt of Italy reached 2,3 trillion euro. This is the second largest debt in euro area. Financial markets were shaken after new government promised to increase spending. On Friday the spread between 10-year bonds yields of Italy and Germany was the highest since 2014.

New plans of government include expensive tax cuts and expenditures increase without any clear idea of how these steps will be financed. As a result, analytics are concerned that such measures can slow process of bad loans reduction and lower banks’ valuations.

Current Moody’s rating of Italy is Baa2. This is the second lowest investment grade rating.