Moody's Downgrades Italy by Two Notches
Moody's Investors Service on Friday downgraded Italy's government bond rating by two notches to Baa2 from A3, and warned it could cut it much further if the country were to lose access to debt markets.

The move left Italy's rating just two notches above junk status and could raise its borrowing costs ahead of a bond sale due later on Friday. The news knocked the euro [EUR=X  1.2193    -0.0003  (-0.02%)   ] down around a quarter of a cent to $1.2190 in Asian trade.Moody's new rating was also below the latest ratings for Italy from agencies Standard & Poor's Ratings Services and Fitch Ratings.

"Italy's government debt rating could be downgraded further in the event there is additional material deterioration in the country's economic prospects or difficulties in implementing reform," the agency warned.

"Should Italy's access to public debt markets become more constrained and the country were to require external assistance, then Italy's sovereign rating could transition to substantially lower rating levels."