italy passes market test after moody\s downgrade
Last Updated : GMT 10:03:45
Arab Today, arab today
Arab Today, arab today

Italy passes market test after Moody\'s downgrade

Arab Today, arab today

Arab Today, arab today Italy passes market test after Moody\'s downgrade

Milan - Arabstoday

Italy passed a tough market test yesterday as its three-year borrowing costs fell well below 5 percent at an auction hours after Moody\'s cut the country\'s rating to two notches above junk status. The US rating agency surprised markets yesterday by lowering Italy\'s sovereign debt rating to Baa2 amid persistent worries about Spain\'s ability to sort out its banking problems, concerns about a Greek exit from the euro and doubts over Italy\'s long-term resolve to push through much-needed reforms. Moody\'s lauded 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 push through necessary changes. \"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.\" Analysts say political uncertainty ahead of elections is the main risk for Italy, where frustration with austerity measures and the country\'s weak and fragmented party system is stoking anti-European sentiment and has helped the meteoric rise of the populist Five Star Movement, led by comedian Beppe Grillo. Respected technocrat Monti, who was called in last November to pull back Italy from the edge of the cliff and avoid a Greek-style debt crisis, has said he will stand down next year. Three-times Prime Minister Silvio Berlusconi, who has kept a low profile since being forced out to leave room for Monti, announced this week he will return to frontline politics as the center-right candidate, further muddling the political outlook. He has taken an increasingly anti-European tone in recent public comments, criticizing Monti\'s austerity policies and openly questioning the value of remaining in the euro. \"Berlusconi seems to have picked up on the increased sense of frustration within the Italian society that the sacrifices being made by the country are not being sufficiently recognized by the markets and that part of the blame lies in the slow EU policy response,\" said BNP Paribas analyst Luigi Speranza. Opinion polls suggest that a center-left bloc would win the elections and it is not yet clear whether Berlusconi\'s return to front line politics may alter the picture. The stark warning from Moody\'s, which comes as investors are already fretting about Spain\'s ability to mend its banking sector, knocked the euro down about a quarter of a cent overnight and initially sunk Italian bond futures. The downgrade prompted angry reactions in Italian political and economic circles, with Italian Industry Minister Corrado Passera calling it \"altogether unjustified and misleading.\" Italian magistrates are currently investigating overall downgrade actions by the three main international rating agencies, which deny vigorously any wrongdoing. The Italian bond market however recovered some ground as Italy managed to sell 5.25 billion euros in medium and long-term bonds, its top targeted amount, fetching the lowest yield since May on a new three-year issue. Yet, the yield difference between 10-year Italian government bonds and their German equivalent remained at around 480 basis points, a high level that is frustrating the government in Rome and that Federico Ghizzoni, who heads of Italy\'s biggest bank by assets UniCredit, has called \'unsustainable\'. Monti this week did not rule out tapping euro zone bailout funds through a new bond-buying system to help ease Italy\'s borrowing costs, a move that Moody\'s says could trigger a further downgrade. Three-year bond yields had risen to a six-month peak of 5.3 percent in June, ahead of a cliffhanger Greek election that some feared may have forced the country out the euro zone and after an unconvincing initial attempt to bail out Spanish banks. In its comments, Moody\'s said the probability of Greece leaving the single currency had increased in recent months as well as the likelihood Spain may require external aid. \"In this environment, Italy\'s high debt and significant annual funding needs of 415 billion euros, 25 percent of GDP, in 2012-13, as well as its diminished overseas investor base, generate increased liquidity risk,\" Moody\'s said. The country\'s economy is projected to contract by as much as 2 percent, dimming the prospect of implementing reforms. Moody\'s took its ratings for Italy below those from agencies Standard & Poor\'s and Fitch, potentially triggering further investment outflows from Italy. Analysts estimate that foreigners hold about one third of Italy\'s public debt, down from 40 percent a year ago. Data from Italy\'s banking association ABI also showed that foreign deposits at Italian banks were down 20 percent year on year. \"This is just Moody\'s opinion. I think our country, and our manufacturing system, is much stronger than the Moody\'s evaluation suggests,\" Italian business association head Giorgio Squinzi said. From arabnews

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

italy passes market test after moody\s downgrade italy passes market test after moody\s downgrade

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

italy passes market test after moody\s downgrade italy passes market test after moody\s downgrade

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today PNG police start removing refugees

GMT 03:00 2017 Friday ,24 November

PNG police start removing refugees
Arab Today, arab today Sophian Yussef reveals suitable decoration

GMT 02:56 2017 Thursday ,23 November

Sophian Yussef reveals suitable decoration
Arab Today, arab today Syria congress to go ahead

GMT 02:24 2017 Friday ,24 November

Syria congress to go ahead
Arab Today, arab today IS media offline for a day

GMT 02:10 2017 Friday ,24 November

IS media offline for a day
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Human form of 'mad cow' disease

GMT 00:11 2017 Friday ,24 November

Human form of 'mad cow' disease
Arab Today, arab today British woman jailed in Iran to appear

GMT 03:19 2017 Friday ,24 November

British woman jailed in Iran to appear
Arab Today, arab today Delhi half-marathon to go ahead

GMT 03:51 2017 Saturday ,18 November

Delhi half-marathon to go ahead
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Mitsubishi Materials units falsified product

GMT 03:24 2017 Friday ,24 November

Mitsubishi Materials units falsified product
Arab Today, arab today 'Robo-taxis' hold promise, and perils

GMT 08:07 2017 Thursday ,23 November

'Robo-taxis' hold promise, and perils
Arab Today, arab today Abeer Sabry reveals reason of “The Flood” success

GMT 08:03 2017 Tuesday ,21 November

Abeer Sabry reveals reason of “The Flood” success
Arab Today, arab today paObama climate envoy slams Trump's rejection

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection

GMT 07:56 2017 Monday ,20 November

Singer Jahda Wahba has unlimited ambitions

GMT 08:03 2017 Thursday ,23 November

Srebrenica women cry tears of joy

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 11:38 2017 Wednesday ,15 November

Unloved vultures fight for their survival

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts

GMT 09:12 2017 Thursday ,23 November

4 in 10 cancers due to modifiable risk

GMT 10:47 2017 Wednesday ,22 November

The Big Apple bike boom

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday