LONDON, July 10 Italian BTP futures fell on
Wednesday after ratings agency Standard & Poor's downgraded
Italy by one notch to BBB and left its outlook negative.
The agency cited concerns about Italy's economic prospects
and the impaired monetary transmission mechanism in a move that
came before an auction of up to 6.5 billion euros of Italian
medium and long-term bonds on Thursday.
BTP futures last traded 91 ticks lower at 109.95.
"It should put some pressure on Italy, but (yields) should
not rise more than 10-20 basis points," said Jan von Gerich,
fixed income chief analyst at Nordea.
"The downgrade illustrates that we haven't reached the
bottom yet (for ratings) and it shows how worried Spain should
be. Spain is more immediately at risk (of forced selling). The
big thing would be if Spain lost its investment grade status."
Spain is rated only one notch above junk by Moody's and S&P
and could face forced selling by investors who only hold
investment grade bonds.
Von Gerich added weak Chinese trade data should support
Bund futures were 19 ticks higher at 142.75.