Moddy's Investors service downgraded three notches italy's government bond rating to A2 from Aa2 with a negative outlook. the rating agency said that the action concludes the review for downgrade initiated june 17 and affirmed italy's short term rating at prime-1.
According to moody's the main drivers for the downgrade were risks to long term funding, an increase in the downside risk to economic growth and increasing uncertainty about the ability to achireve fiscal targets.
The downgrade reflects the weight of these growing risk relative to some positive credit attributes. these include lack of significant imbalances in the economi or severe pressure on private financial and non financial sector balance sheets, as well as the actions undertaken by the govornment over the summer."
Moody's affirmed that ther three notch downgrade is largely driven by 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.
the credit rating agency warned that if risks of further deterioration in market sentiment materalized and italy is place in a position that could constrain acces to the public debt markets. the countryps rating could transition to substantially lower rating levels.
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