Moody\'s downgraded Italian electricity company ENEL to Baa2, down from Baa1, the rating agency announced on Tuesday. ENEL is the largest electricity operator in Italy and the second largest utility in Europe for installed capacity. The new rating means ENEL is closer to being assessed a \"substantial credit risk\" as opposed to a \"moderate credit risk\". Moody\'s also gave ENEL a \"Negative Outlook\" for the future. Moody\'s said the reason for the downgrade were contextual, including poor macroeconomic climate in its core markets of Italy and Spain, worsening regulatory and political conditions in Spain, and ENEL\'s limited ability to mitigate these risks. \"Moody\'s expects ENEL to continue to adopt measures to limit the impact (of the regulatory and economic climate) on its financial profile,\" Moody\'s wrote in its announcement. Yet Moody\'s also maintains that it is \"improbable\" that these measures are \"sufficient to balance the increased risked and pressures from its operative context\". Moody\'s finds it unlikely ENEL\'s profits in markets outside of Italy and Spain will be sufficient to compensate the rising risk.