Egan-Jones downgrades Italy further into junk territory to BB
Sean Egan, president of Egan-Jones Ratings Co., talked to Bloomberg Television yesterday about the agency’s decision to cut Italy’s credit rating to BB from BB+. The rationale is simply that public debt in Italy is growing while GDP is not. And austerity will make this worse. Jones believes that talk about Italy’s restructuring will soon begin unless drastic measures are taken.
Meanwhile the IMF has strongly denied rumours that it is planning a bailout package for Italy.
Today’s Italian bond auction saw what Marc Chandler calls “respectable demand and the upper end of the 5.5-8.0 bln euros were raised.” But Italy had to offer a record 7.89% yield to sell 3-year paper today.
In the video below, Egan also discusses the rating firm’s controversial analysis of Jefferies Group, the broker-dealer now in a severe liquidity crisis.