Toronto-based DBRS downgrades Italy and Spain

Canadian rating agency DBRS has downgraded the credit rating of both Italy and Spain, citing weakening growth outlook and deteriorating funding conditions in both countries.

Spain was cut two notches to A (low) from A (high) and Italy was downgraded one level to A. The Toronto-based firm confirmed Ireland’s grade to A (low), four steps from junk.

According to a statement, Italy faces “persistent stress in market-funding conditions and rising systemic risks.”

The Spanish economy has challenging financing conditions which limits its growth outlook.

The downgrade adds pressure on Italy and Spain, which last week were in the spotlight as the risk of a formal request for a European bailout increased.

DBRS is one of the four companies accepted by the European Central Bank to rate the securities it takes as collateral, with Standard & Poor’s, Fitch Ratings and Moody’s.

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