rumours circulated this morning that S&P was considering a downgrade of Italian sovereign debt, and while those rumours were denied, Italian bank shares were slammed over contagion worries.
Yesterday, Moody’s put 18 Italian banks on review for downgrade just weeks after putting the Italian sovereign on review. The reason: Italian banks hold a great deal of their own sovereign’s debt.
Thus, today’s rumour that S&P was considering an Italian sovereign downgrade has put fear into Italy’s markets. Shares of UniCredit were down as much as 8.2% at one point, and Intesa Sanpaolo shares were down as much as 7.2%. Trading was stopped on both stocks today, but it has resumed, and their shares have rebounded significantly.
Notably, there appears to be a pattern of Friday activity from major ratings agencies on Italian debt. Last week, we had the Italy announcement from Moody’s. Further, there was a Friday warning on May 20 that S&P may cut Italy’s debt rating. So investors now have the jitters about Friday news dumps on the subject of Italy.
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