LONDON (ShareCast) - Standard & Poor's (S&P) cut Italy's rating one notch to "BBB" from "BBB+" in a move UniCredit (Milan: UCG.MI - news) calls "rather backward-looking".
S&P took the rating action on Tuesday explaining that it reflects "the effects of further weakening growth on Italy's economic structure and resilience, and its impaired monetary transmission mechanism".
The outlook remains negative implying that the credit agency believes there is "at least a one-in-three chance that the rating could be lowered again in 2013 or 2014".
UniCredit criticized the decision in a fixed income report published on Wednesday. "The reasons for the downgrade seem to be rather backward-looking," these experts said. "The timing of the decision comes as a surprise, with no clear trigger, especially considering the recent data releases supporting the view that we might see the end of the recession before year-end," they added.
After this downgrade, Italy's rating remains two notches above non-investment grade and, in comparison, one notch above neighboring peripheral country Spain.
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