Rating agency Moody’s has downgraded Italy credit rating by three notches to A2 from Aa2, citing material increase in funding risks and negative outlook. The downward pressure comes at a time when euro zone is still struggling to keep a smaller constituent economy like Greece as amply liquidated.

The lowering of rating by Moody’s Investors Service will further worsen investor sentiment and raise government’s borrowing costs for the euro zone’s third largest economy. The rating cut places Italy lower than Estonia; and on par with Malta and Botswana.

Earlier in September, Standard & Poor’s had downgraded Italy’s long-term debt rating to A from A+, leaving room for further cuts with its negative outlook on the weakening economic growth prospects. During August, S&P had also slashed its rating for the US government debt to AA+ from triple-A rating.

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