Italy Bonds End Winning Run After Specter of Junk Rating Returns
- Stable outlook may ease fears of move to non-investment grade
- Fitch deviates from July 10 review date, Moody’s due in May
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Just when investors thought they were safe holding Italian bonds, Fitch Ratings took the country to the precipice of losing its investment grade rating.
In a surprise move, Fitch downgraded the euro area’s third-largest economy by a notch to BBB-, just one level above junk, putting the nation’s bonds on course to ending their longest winning run in a month. It’s ratcheting up the pressure on Italy’s political leaders to make sure fiscal deficits don’t get too far out of hand, and on the European Union to provide greater support.