Egan-Jones cuts Italy rating again

Independent rating agency Egan-Jones has cut Italy’s sovereign rating to CCC+ from B+, slashing the country’s rating further into junk status.

“The country is currently in a recession with economic contraction over the last couple of quarters. Italy’s independent ability to support its banks is questionable given the country’s and banks’ weak condition,” Egan-Jones said in a statement. The outlook for Italy is negative.

According to the agency, Italy’s debt-to-gross domestic product ratio will exceed 125% by the end of the year as its annual deficit nears 4% of GDP

Egan-Jones predicts Italy’s chance of default in the next year is 22%, as Italy faces rising yields and restricted access to bond markets likely to continue through 2013 without external support.

Egan-Jones had already downgraded Italy on June 1, and has not rated the country as investment grade since July 2011.

Standard & Poor’s rates Italy BBB+, Moody’s Investors Service rates the country Baa2 and Fitch rates the country A-. All three ratings carry negative outlooks.

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