Wednesday, 5 October 2011

Italy's Credit Rating Slashed Amid Eurozone Warnings

THE INDEPENDENT: Moody's lowered its rating on Italy's bonds by three notches on today, saying it saw a "material increase" in funding risks for eurozone countries with high levels of debt and warning that further downgrades were possible.

The agency downgraded Italy to A2 from Aa2, a lower rating than it holds on Estonia and on a par with Malta and kept a negative outlook on the rating.

The euro pared gains against the dollar and Japanese yen immediately following the announcement which comes after Moody's rival Standard and Poor's cut its rating on Italy by one notch to A/A-1 on Sept. 19.

The cuts underline growing investor concern about the eurozone's third largest economy, which is now firmly at the centre of the debt crisis and dependent on help from the European Central Bank to keep its borrowing costs under control.

"The negative outlook reflects on[-]going economic and financial risks in Italy and in the euro area," Moody's said in a statement.

"The uncertain market environment and the risk of further deterioration in investor sentiment could constrain the country's access to the public debt markets," it said. » | Reuters | Wednesday, October 05, 2011