Moody's downgrades Italy, Spain

NMoody's Investors Service on Monday cut the long-term credit ratings of Italy, Spain and some other eurozone nations, citing their susceptibility to the growing financial and macroeconomic risks caused by the eurozone crisis. Moody's lowered its ratings on Italy, Portugal, Slovakia, Slovenia and Malta by one notch and slashed Spain's sovereign rating by two notches. Moody's said in a statement that the downgrade decision was made because of the uncertainty over the euro area's prospects for institutional reform of its fiscal and economic framework and the resources that will be made available to deal with the crisis. Meanwhile, Europe's increasingly weak macroeconomic prospects, which threaten the implementation of domestic austerity programs and the structural reforms, were also one of the main drivers of the action. These factors will continue to have impact on market confidence, with a high potential for further shocks to funding conditions for stressed sovereigns and banks, according to Moody's. The ratings agency also lowered the outlook on France, Britain and Austria to negative but kept their ratings at triple-A for the time being. "The negative outlooks reflect the presence of a number of specific credit pressures that would exacerbate the susceptibility of these sovereigns' balance sheets, and of their ongoing austerity programs, to any further deterioration in European economic conditions and financial landscape," said the agency.