Italy’s credit rating lowered by S&P

S&P dropped Italy's long and short-term sovereign credit rating to 'BBB-/A-3' from 'BBB/A-2', the ratings agency said in a statement.

The agency revised its gross domestic product growth estimates for Italy over the 2014-2017 forecast horizon down to 0.5 percent and 1.2 percent, respectively, from 1.0 percent and 1.9 percent.

"Persistently low inflation and a difficult business environment continue to weigh on Italy's economic prospects," it said.

S&P also revised its estimate of Italian public debt, seeing an increase of €80 billion by the end of 2017, or 4.9 percent of estimated 2014 GDP.

The new rating is the weakest note of the investment category, but Italy was not at risk of falling into the speculative category in the short or medium term as its outlook remains "stable".

"The stable outlook reflects our expectation that the government will gradually implement comprehensive and potentially growth-enhancing structural and budgetary reforms," S&P said.

It added that it also expects the European Central Bank's policy will continue to support measures to normalise inflation in the eurozone, of which Italy is the third-largest economy.