Italy Bond Rating are Down by Moody Rating Agency

Italy debt
Italy debt

Recently International rating agency, Moody's, downgraded Italian debt. Unmitigated, Italy bond ratings are down with increasing levels of risk financing for countries in Europe that have large debts.

In addition to lower debt ratings, Moody's also warned the possibility of decreased ratings in the future.

Moody's downgraded Italy's debt to Aa2 from A2, or a rating that is much lower than level with Estonia and Malta. This rating agency also provides outlook negative for Italy.

Italy's debt downgrades are increasingly making among investors in Europe are concerned about the condition of the country's third largest economy in Europe. The condition is also increasingly emphasized central Europe are in a debt crisis and the increasing dependence on the injection of funds from the European Central Bank or the European Central Bank (ECB).

"The prospect of a negative outlook indicates that future economic and financial risk in the Italian and European regions," said Moody's written statement as quoted from Reuters, Wednesday, October 5, 2011.

Moody's to assess the uncertainty of market conditions and the risk of worsening of investor sentiment will progibited access to European countries in the debt markets.

Even Moody's estimates that the Italian debt ratings could be transitioned to a lower level if there is no certainty about the long-term liquidity support from outside Italy.

For information, Italy is currently experiencing economic problems are mixed. Public debt has increased to 120 percent of gross domestic product (GDP). The condition is exacerbated by the emergence of conflict in the parliament which led to a warning to financial markets.

Not Helping
Decision Moody's downgraded Italy's debt is surprising European financial markets. The reason, the international rating agency has said the review process possible reduction in the new Italy's debt rating to be completed within the next month.

"This announcement not only shocked but did not help the economic situation of Europe," said Head of Equity Research of Louis Capital in New York, United States, Robbert Van Batenburg.

Meanwhile, Italian Prime Minister Silvio Berlusconi confirmed, the decision of Moody's downgraded the country's debt had been expected.

Berlusconi confirmed his government's commitment to work with utmost to make the budget more objective. Included, to make Italy a target of a balanced budget in 2013 that was approved by the EU commission.