The Italian government’s credit-worthiness has been cut by the Moody’s ratings agency, who blamed increased risks for long-term funding throughout the euro area.
The agency sliced three notches off Italy’s bond ratings from Aa2 to A2 with a negative outlook.
Another agency, Standard and Poor’s downgraded Italy’s debt two weeks ago.
Prime Minister Silvio Berlusconi said this latest cut was expected and he reiterated that the government was committed to its goal of balancing the country’s budget by 2013.
Experts believe that Italy’s banks will be the next in the credit agencies’ sights.
That, they say, could prove far more significant, making it more difficult and more costly for Italian banks to borrow and so adding fuel to the already spiralling crisis in the euro zone as a whole.