S&P cuts Italy’s credit rating to two levels above junk
Standard and Poor’s issues BBB rating on expectations of further weakening of economic prospects
Italian prime minister Enrico Letta. Yields on 10-year Italian government bonds rose three basis points to 4.41 per cent today. Photograph: Reuters/Tony Gentile
Italy’s credit rating was lowered to BBB, or two levels above junk, by Standard and Poor’s because of expectations for a further weakening of economic prospects and the nation’s impaired financial system.
The outlook on the rating, reduced from BBB+, remains negative, according to the ratings agency.
Italy’s economic output in the first quarter of 2013 was 8 per cent lower than in the last quarter of 2007 and continues to fall, S&P said.
The company lowered its growth forecast for 2013 to minus 1.9 per cent from minus 1.4 per cent, in part because of the rigidities in the labour and product markets.
Yields on 10-year Italian government bonds rose three basis points to 4.41 per cent today.
They yielded as much as 6.71 per cent in July 2012.
Investors are paying less attention to the views of ratings companies and relying more on their own analysis.
Yields on sovereign securities last year moved in the opposite direction from what ratings suggested in 53 per cent of 32 upgrades, downgrades and changes in credit outlook, according to data compiled by Bloomberg published in December. – (Bloomberg)