Credit ratings agency Standard & Poors cut its outlook for Italy to "negative" from "stable", citing weak outlook for growth and reduced prospects for slashing its debt mountain. The downward revision, which raises the risk of a downgrade of Italy's sovereign rating, may heighten fears that contagion from Greece's and other European countries' debt crisis could be spreading to the eurozone's third-largest economy.
Potential political gridlock could contribute to fiscal slippage. As a result, we believe Italy's prospects for reducing its general government debt have diminished.