International credit rating agency Moody’s has lowered Italy’s government bond rating by two notches from A3 to Baa2 and hinted about possibly cutting it even further.
The Baa2 rating is just two notches above junk status, and the same rating held by Kazakhstan and Bulgaria.
Moody’s said it made the decision as the potential has increased that the ongoing fiscal crisis in Greece and Spain could spread to Italy, and foreign investors are reluctant to buy Italian government bonds as a result.
Moody’s warned that if the economic outlook worsens or if reform measures prove difficult to implement, Italy’s credit rating could be further downgraded.
