The Italian government has shown that it is still able to borrow money at affordable rates of interest, despite getting a further thumbs down from the Moody’s ratings agency.
Just hours after a further downgrade from Moody’s, Rome was able to sell 5.25 billion euros worth of government bonds.
Friday’s cut by the US agency to Baa2, to just two notches above junk status, was criticised by the Italian Industry Minister Corrado Passera. He said: “The Moody’s judgement is altogether unjustified and even misleading because it does not take into account all the efforts that our country is making.”
International demand for Rome’s bonds is low but Italian banks are buying them.
The bulk of those sold on Friday are due to mature in three years time. The interest rate that Italy had to offer on those was down at 3.6 percent in May, it hit 5.3 percent in June and has now slipped down to 4.65 percent.
Moody’s said it was lowering Italy’s sovereign debt rating because of doubts over the country’s long-term resolve to push through much-needed reforms – with the economy forecast to shrink two percent this year – and fears about Spain’s problems spreading to Italy.
The agency praised Prime Minister Mario Monti’s commitment to fiscal reforms and structural consolidation. But warned it could again cut the country’s marks if the next Italian government failed to continue along this path.
“The negative outlook reflects our view that risks to implementing these reforms remain substantial. Adding to them is the deteriorating macroeconomic environment, which increases austerity and reform fatigue among the population,” it said.
“The political climate, particularly as the spring 2013 elections draw near, is also a source of implementation risk.”
The European Commission, which has so far mostly refrained from commenting on rating actions on individual eurozone countries, queried the timing of Moody’s downgrade while backing the steps Italy has taken address its structural weaknesses.
“I do think one can legitimately and seriously question the timing of it, whether the timing was appropriate,” Commission spokesman Simon O’Connor told a regular briefing.
Copyright © 2014 euronewsMore about:
- 1Hungary’s healthfood king takes his sugarfree, low carb company public
- 2Air France strike is latest turbulence among Europe’s airlines
- 3Low-cost in the air and on the ground, low-fat and high profit
- 4Taxi battle: traditional cabbies take on car-sharing service Uber
- 5Making the most of the net effect
- 1Air France strike is latest turbulence among Europe’s airlines
- 2Hungary’s healthfood king takes his sugarfree, low carb company public
- 3Federal Reserve renews low interest rate pledge
- 4Counting the economic cost of Scottish independence
- 5Russian billionaire’s arrest raises memories of Yukos seizure
- 1Podemos: Spanish indignation in Brussels’ corridors of power | euronews, reporter
- 2Israel announces it will seize 400 acres in West Bank | euronews, world news
- 3Watch: Angry mob throw Ukraine MP into rubbish bin | euronews, world news
- 4Japan sounds bluefin warning, calls for 50% catch cut | euronews, world news
- 5Hoverbike on the horizon | euronews, hi-tech
- 6China executes eight Muslims convicted of terrorism | euronews, world news
- 7New car offers freedom for disabled drivers | euronews, hi-tech
- 83D printing: a driving force in design and engineering | euronews, hi-tech
- 9Ukraine accuses Russian aid convoy of stealing factory equipment | euronews, world news
- 10Rise of the machines | euronews, futuris
- 11Young Yazidi girl escapes Islamic State kidnappers | euronews, world news
- 12#ن: How an Arabic letter was reclaimed to support Iraq’s persecuted Christians | euronews, world news
- 13EU leaders name Donald Tusk European Council president | euronews, world news
- 14The business benefits of EU chemical regulation | euronews, business planet
- 15#Indyref Live: Scotland votes on independence from UK | euronews, world news
- 16Risk of fresh ash cloud threatens European air travel | euronews, world news
- 17Canada sends hilarious barb to Russia over Ukraine ‘incursions’ | euronews, world news
- 18Thousands of Catalans call for choice on split from Spain | euronews, world news
- 19Iceland puts on a show as two of its volcanoes spew out lava | euronews, world news
- 20Marine Le Pen criticises France’s decision to halt Mistral warship sale to Russia | euronews, world news
Wires > Business
- 03:33 CET Austrian town officials resign after Nazi basement film
- 02:09 CET North Korea says imprisoned American tried to become ‘second…
- 01:56 CET Kiev, rebels agree to extra measures to ensure Ukraine cease-fire
- 01:43 CET U.S., Canada send jets to intercept Russian aircraft
- 01:36 CET Chad accuses U.N. of neglecting its peacekeepers in Mali
- 01:05 CET Third term beckons for New Zealand government as polls open
- 00:26 CET Ebola lockdown brings Sierra Leone capital to a halt
- 22:45 CET Insight – Campaign donations highlight winners, losers in Brazil…