New York: Moody's Investors Service downgraded the credit ratings of 13 Italian banks on Monday, after cutting Italy's sovereign rating last week, as well as lowering ratings for companies and local government authorities.
"Along with the increase in the risk of sovereign bond defaults, the downgrade of Italy's long-term ratings to Baa2 also indicates a similarly increased risk that the government might be unable to provide financial support to its banks in financial distress," the ratings agency said in a statement.
Moody's dropped seven banks by one notch, the other six by two notches. They all remain investment grade.
The downgrades include a drop of one notch to seven financial institutions and two notches for six others.
The downgraded banks are: UniCredit and UniCredit Leasing; Intesa Sanpaolo; Banca Carafirenze; Banca IMI; Banca Monte Parma; Cassa di Risparmio di Parma e Piacenza; Banca Popolare Friuladria; Banca Carige; Credito Emiliano; GE Capital SpA; Cassa Depositi e Prestiti; and Istituto Servizi Mercato Agricolo Alimentare.
Moody's says fragile market confidence and financial problems in Greece and Spain have increased the risks Italy faces. Moody's also said it's worried about a diminished willingness among overseas investors to buy the Italy's bonds. The new rating for government bonds — Baa2 — is two notches above junk status.
The agency said Italy's long-term resolve to push through much-needed reforms and persistent worries about Spain and Greece were increasing its liquidity risks.
Moody's also cut ratings for major utility companies.
Terna, the Rome-based national electricity operator was cut to Baa1, and infrastructure group Atlantia, gas operator Snam and energy and water services group Acea also had their ratings lowered.
The country's biggest postal service Posta Italiane saw its rating dropped to Baa2, while energy giant Eni was lowered one notch to A3 from A2.
Moody's cut 23 local government authorities including Lombardy, Lazio, as well as the cities of Milan and Naples.
Moody's also said it put Italian defence giant Finmeccanica on review.
With Agency Inputs
First Published: Tuesday, July 17, 2012, 08:55