5 Oct 2011

Italy credit rating lowered

10:51 am on 5 October 2011

Moody's has downgraded Italy's creditworthiness.

Italy's government bond rating has fallen from Aa2 to A2. Moody's says it's due to a greater risk of slowing global economic growth.

The agency warns that Italy's rating may be cut further.

The BBC reports the announcement caused an immediate drop in the euro's value.

The downgrade is likely to be followed by similar cuts in the credit rating of Italy's banks, which would put severe pressure on their ability to borrow.

Fitch and Standard & Poor's cut New Zealand's credit rating from AA+ to AA last Friday.