Moody's downgrades Italy by 2 notches

13 July 2012

Italy's sovereign debt rating has been cut by a leading credit agency due to fears over the country's economic state, it has emerged.

Moody's announced this morning (13 July) its decision to downgrade the embattled Mediterranean nation from A3 to Baa2, as well as placing it on negative outlook amid fears the country's financial situation may deteriorate in the near future.

According to the body, the combination of the ongoing eurozone debt crisis and the increasing hazards surrounding Italy's liquidity meant it had little choice but to reduce it to just two levels above junk status.

"Should Italy's access to public debt markets become more constrained and the country were to require external assistance, then Italy's sovereign rating could transition to substantially lower rating levels," it added.

Moody's went on to say that problems in the eurozone are showing no signs of abating in the coming months, as issues in other struggling member states such as Spain and Greece intensify.

By Tony Aynsley

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