Egan-Jones Ratings Co. cut the sovereign debt rating of Italy to double-B from double-B-plus, the company confirmed Monday.
The downgrade came as Italian bond yields have soared in recent weeks, which could have long-term repercussions on the country’s ability to finance itself and manage through a potential slowdown in its economy. The Italian Treasury sold EUR567 million of 2023-dated inflation-linked bonds, known as BTPei, against EUR500 million to EUR750 million planned, at a yield of 7.30%.
A double-B rating is considered speculative grade.
Egan-Jones, which is smaller than the three biggest ratings firms–Standard & Poor’s, Moody’s Investors Service and Fitch Ratings–rates Italy much lower than those bigger competitors. Egan-Jones’ double-B rating on Italy is six notches lower than where Moody’s and S&P rate Italy. It is seven notches below the Fitch’s rating of the country.
All three of the bigger ratings firms have a negative outlook on Italy’s rating, but none currently have the rating on review for a potential downgrade.
