* Fitch cut Italy’s rating by one notch to BBB-plus
* Downgrade news “dramatic”: centre-left party official
* Economy Minister: debt sale will succeed despite downgrade
By Francesca Landini
CERNOBBIO, Italy, March 9 (Reuters) - Politicians from Italy’s two main parties disputed the impact of the country’s latest credit downgrade on Saturday while the Economy Minister sought to play down concerns about debt sales set for next week.
Italy is one of the world’s biggest sovereign debtors and Fitch said its latest credit rating cut on Friday reflected worries about deep recession and political instability.
“There is no time to lose, political forces should find a compromise on a new government otherwise the country heads towards disaster,” said Enrico Letta, vice secretary of Italy’s centre-left Democratic Party (PD).
But former Prime Minister Silvio Berlusconi’s People of Freedom (PDL) party dismissed the downgrade.
“The rating agencies are not the bible, they are private companies whose aim is financial profit,” said Angelino Alfano, secretary of Berlusconi’s centre-right party.
“For us it would be better to return to the ballot boxes in June than to push the country towards a disaster,” he added.
Italy has often come close to being sucked into the euro zone debt crisis. Investors fear the strong protest vote against austerity measures in last month’s election could make it impossible for its next government to meet conditions for any European Central Bank support on debt markets.
Outgoing Economy Minister Vittorio Grilli, speaking at the same event in Cernobbio, said Italy should still be able to raise funds next week.
“Obviously (the downgrade) does not please me, but it does not surprise me,” Grilli said.
“We always prepare debt sales in every detail. I am confident that next week’s debt auctions will go well.”
The treasury will offer 7.75 billion euros ($10 billion) of one-year bills on March 12 and up to 7.25 billion euros of BTP bond and CCTeu floating rate notes on March 13.
The PD’s Letta, speaking on the sidelines of a workshop in Cernobbio, on the shores of Lake Como, said: “The next step will be a downgrade of Italian bonds to junk status.”
Fitch’s rating on Italy remains three notches above junk status, while Moody’s rates the country Baa2, two notches inside investment grade territory, and Standard & Poor’s BBB-plus, three notches above the danger zone. All the three agencies have a negative outlook on the country.
The PD, which won control of the lower house but failed to win the upper house Senate, has outlined an 8-point platform to try to win support for a new government.
Center-left leader Pier Luigi Bersani ruled out any agreement with Berlusconi’s centre-right but hopes to win support for a minority government.
To date the anti-establishment 5-Star movement headed by former comedian Beppe Grilli has refused to form a stable alliance with the centre-left.
Economy Minister Grilli said the country would continue on the reform trail started by Mario Monti’s technocrat government.
“Italy is moving within the normal timeframe every country needs in order to take political decisions,” Grilli said, adding he expected clarity on the political front in the next few days.
“The treasury will do everything necessary to keep the country safe,” he said.