Italy’s credit rating cut to practically junk status

Italy’s credit rating has been cut to within one downgrade of junk status as soaring public debt threatens to ignite tensions in the eurozone.

Borrowing costs for the virus-stricken country jumped after Fitch – one of the big three ratings agencies – reduced Italian government bonds to “BBB minus”, the lowest level in investment grade territory.

It predicted that the country’s debt will surge 20 percentage points to 156pc of GDP in 2020 as Giuseppe Conte’s government battles the economic fallout of the coronavirus.

Economists warned the downgrade ramps up the pressure on the European Central Bank to stop borrowing costs rocketing in indebted countries as it gears up for its meeting tomorrow.

Fitch put a “stable” outlook on the debt, predicting the ECB’s bond buying programme would keep Italian yields low. But Italy’s 10-year bond yield rose as much as 10 basis points to 1.83pc as investors become more nervous about the country’s huge debt pile.

The ratings agency warned it could be forced to make more downgrades if Italy does not implement “a credible economic growth and fiscal strategy” that shores up investor confidence.

Read more via The Telegraph