Moody's Also Drops Italy's Credit Rating Cites woes with the euro, not Italy itself By Kevin Spak, Newser Staff Posted Oct 5, 2011 8:49 AM CDT 2 comments Comments Italian Prime Minister Silvio Berlusconi reacts during a session of the Italian parliament on September 14, 2011 in Rome in this file photo. (Getty Images) (Newser) – Moody’s followed Standard & Poor’s lead and downgraded Italy’s credit rating yesterday, slashing it from Aa2 to A2 and setting its outlook to “negative,” meaning it envisions more cuts to come. Moody’s said its decision wasn’t based on Italy’s government finances, but on worries about its economic growth and, more importantly, the erosion of confidence in the euro, the Guardian reports. Silvio Berlusconi dismissed the move as “expected,” as indeed it has been ever since S&P’s downgrade. Analysts also expect the news to lead to downgrades for Italy’s banks. “This downgrade will make it even harder for Italy to borrow,” one BBC editor said. “However that is not the worst of it.” If banks also have to spend more to borrow, he explained, it would exacerbate the eurozone banking crisis.