Moody's has downgraded the outlook for Italy's debt from "stable" to "negative" and is just one step away from putting it at the "junk" level.

Thus, the rating agency may be in the process of putting the rating on a "junk" rating.

Currently, the rating is at Baa3, a nomenclature corresponding to the lowest level of investment quality.

The financial rating agency's warning comes in the wake of Mario Draghi's resignation, following the withdrawal of support from the three partner parties in a vote of confidence, which led to the calling of early elections in the country.

"Moody's fears the impact of the political crisis and war in Ukraine on Italy's debt quality, forecasting a weaker fiscal position, weaker economic growth and higher financing costs," the BA&N Research Unit's daily bulletin quoted by the newspaper Económico says.

Elections in Italy were brought forward to September 25 after the Draghi government fell at the end of July.