(MENAFN) Moody's Investors Service stated that it has lowered Italy's government bond rating two notches to Baa2 from A3, with the outlook staying negative, reported Xinhua News.
The ratings agency attributed the move, the second in 5 months, to growing risks Italy faces from the rise in its funding costs or losing market access amid increasing euro zone risks and worsening economic outlook.
It said that there's a main contagion risk from Greece and Spain, especially as the possibility of the first leaving the euro had grown whereas the latter's banking system is expected to report losses more than previously forecasted.
It is worth noting that due to Italy's fragile growth and rising jobless rate, the ratings agency forecasts the country's 2012 real gross domestic product (GDP) growth to shrink by 2 percent.
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