More European downgrades in the pipeline?

5 October 2011

Additional credit rating downgrades across Europe could be on the cards following the reduction endured by Italy.

Moody's Investors Service has warned that countries lying below the top Aaa level may see their points slashed as the debt crisis engulfing a number of regions on the continent threatens to spread, Bloomberg reports.

The ratings agency said it expects fewer nations currently underneath this mark to retain high ratings.

"All but the strongest euro-area sovereigns are likely to face sustained negative pressure on their ratings," the organisation observed.

However, the body - which is part of Moody's Corporation - claimed Aaa-rated countries currently face no immediate downward pressures that could serve to warrant downgrades.

The announcement followed Moody's credit rating cut of Italy from AA2 to A2.

This was the first tome since 1993 that the level was reduced and came amid mounting concern that the country's government is struggling to shore up its arrears.

By Gary Cooper

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