First Credit Agricole, now Italy….Maestro: the EUR take down orchestra is reaching the fortissimo cadenza. Next up: the glissando.

Overview

• In our view Italy’s current growth prospects are weak, and the political commitment for productivity-enhancing reforms appears to be faltering.
• Potential political gridlock could contribute to fiscal slippage.
• As a result, we believe Italy’s prospects for reducing its general government debt have diminished.
• We have therefore revised the rating outlook on Italy to negative, implying a one-in-three chance that the ratings could be lowered within the next 24 months.
• We have also affirmed the ‘A+/A-1+’ sovereign credit ratings on Italy. (more…)