Italy downgrade would come as no surprise - Allianz CIO

A downgrade of Italy's credit rating by one of the major ratings agencies would come as "no surprise", according to Allianz Global Investors' chief investment officer Neil Dwane.

Dwane said a downgrade would reflect Italy's huge debt to GDP ratio - the second highest in Europe - and the political instability of the country. "With an unelected government in power, which relies on elected politicians for its authority, Italy looks unstable," he said. Dwane also has concerns about Italy's rising longer-term funding rate, which is eating into government revenues.  "This leaves less for the government to spend on its other activities, and more need for austerity measures. In the first half of this year, Italy will also need to refinance €350bn of government debt...