S&P Cuts Italian Debt to A-Rated, Receives Lashing from Berlusconi's Office
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Standard & Poor's cut it's credit rating on Italian debt late Monday night, the country's first downgrade in five years.
The rating moved from A+ to A; S&P cited weak economic growth, a fragile government, and increasing borrowing costs. These factors, S&P said, make it difficult to reduce Europe's second-biggest debt.
Italy isn't one to take things sitting down. According to Bloomberg, Silvio Berlusconi's office issued an email which stated S&P's valuations "seem dictated more by newspaper speculation than by reality, and appear influenced by political considerations." The S&P responded by saying ratings are "apolitical," and indicate how different "political initiatives may impact financial accountability."
The reduced rating from S&P, which is still five notches above junk, is three below the comparable rating from Moody's.
Italy currently has a debt-to-GDP ratio of 120 percent, the second highest in the Eurozone following Greece.
Berlusconi's office said it is working on a plan to bolster growth initiatives and balance the budget by 2013.
Following the cut, Italian 10-year yields rose 9 basis points to 5.68 percent while its two-year increased 10 basis points to 4.29 percent.
The rating moved from A+ to A; S&P cited weak economic growth, a fragile government, and increasing borrowing costs. These factors, S&P said, make it difficult to reduce Europe's second-biggest debt.
Italy isn't one to take things sitting down. According to Bloomberg, Silvio Berlusconi's office issued an email which stated S&P's valuations "seem dictated more by newspaper speculation than by reality, and appear influenced by political considerations." The S&P responded by saying ratings are "apolitical," and indicate how different "political initiatives may impact financial accountability."
The reduced rating from S&P, which is still five notches above junk, is three below the comparable rating from Moody's.
Italy currently has a debt-to-GDP ratio of 120 percent, the second highest in the Eurozone following Greece.
Berlusconi's office said it is working on a plan to bolster growth initiatives and balance the budget by 2013.
Following the cut, Italian 10-year yields rose 9 basis points to 5.68 percent while its two-year increased 10 basis points to 4.29 percent.
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