Moody's Downgrades Italy From Aa2 To A2, Negative Outlook

Frankfurt am Main, October 04, 2011 -- Moody's Investors Service has today downgraded Italy's government bond ratings to A2 with a negative outlook from Aa2, while affirming its short-term ratings at Prime-1. The rating action concludes the review for downgrade initiated by Moody's on 17 June, 2011.

The main drivers that prompted the rating downgrade are:

(1) The material increase in long-term funding risks for euro area sovereigns with high levels of public debt, such as Italy, as a result of the sustained and non-cyclical erosion of confidence in the wholesale finance environment for euro sovereigns, due to the current sovereign debt crisis.

(2) The increased downside risks to economic growth due to macroeconomic structural weaknesses and a weakening global outlook.

(3) The implementation risks and time needed to achieve the government's fiscal consolidation targets to reverse the adverse trend observed in the public debt, due to economic and political uncertainties.

The downgrade reflects the weight of these growing risks relative to some positive credit attributes. These include a lack of significant imbalances in the economy or severe pressure on private financial and non-financial sector balance sheets, as well as the actions undertaken by the government over the summer. Moody's notes that the size of the rating action is largely driven by the sustained increase in the country's susceptibility to financial shocks due to a structural shift in market sentiment regarding euro-area countries with high debt burdens. A country's susceptibility to shocks is a key factor under Moody's sovereign methodology.

Zero Hedge

Oh look more good news coming out of the Euro Zone. This will surely be bad for Italy, because now it will be charged more for the money that it borrows. Everything is going smoothly over there according to the news every day though. Don't see how this could have possibly happened. /end sarcasm
Every day more and more news is coming out of the Euro Zone that is pointing to a collapse of not only a basket currency, but possibly several sovereign nations as well. The future does not look so good from where I am standing.

I stared and flaged this post as I wanted to see the responses and see how many Italians show up to bitch ....Oh waite does this effect my puny 401 k ...and I must say ks have little to do with my portfolio ....peace

According to ZH, S&P have flagged putting France on downgrade review. A possible downgrade of France possible and on the horizon as well?

reply to post by surrealist


I think the entire Euro Zone is up for review of downgrade honestly. Who is left that hasn't been part of the bailout of Greece? I think about the entire region helped out in some way or another.

And to add to the joy a dutch bank called halax is going
to need money to stop going under.
So here we go again.......

Credit crunch mk 2 anyone.