8 Oct 2011

Agency cuts Italy, Spain credit rating

9:20 am on 8 October 2011

International ratings agency Fitch has downgraded Italian and Spanish government debt.

Fitch Ratings cut Italy's rating by one notch from AA- to A+ and lowered Spain's sovereign credit rating two levels, to AA- from AA+.

The company said the intensification of the euro zone debt crisis constituted a significant financial and economic shock which has weakened Italy's sovereign risk profile.

Fitch raised concerns about the strength of Italian banks, particularly in light of the current debt crisis, the BBC reports.

In recent weeks, major ratings agencies Standard & Poor's and Moody's have also downgraded Italy's rating.

It says Spain is threatened by slow growth and raised questions about the country's ability to cut its debt levels quickly.

Fitch added that it expected growth to remain subdued between now and 2015, and unemployment to remain high. Spain has the highest jobless rate in the eurozone, at more than 20%.

However, the agency said the Spanish economy should grow faster than the eurozone average after this date.

The agency kept both countries' ratings on negative outlook.

On 30 September, Fitch Ratings downgraded the New Zealand's rating by one notch to AA, citing the country's rising debt and persistent and widening current account deficits while Standard and Poor's lowered the credit rating one notch from AA+ to AA, saying the country's' external debt is set to worsen, while