BAML: Italy’s $3 Trillion Debt Load Much More Worrisome Than Domestic $3 Trillion BBB Market

Moody's downgraded its sovereign debt rating for Italy to a notch above junk status, but Bank of America Merrill Lynch holds an uneasy view of the country's debt. In fact, the firm is "much more comfortable" with the $3 trillion BBB-rated U.S. corporate bond market than it is with the almost-$3 trillion BBB-rated Italian sovereign bonds.

Lessons for Italy from Greece

In a report this week, BAML Credit Strategist Hans Mikkelsen and team drew comparisons between Italy's current situation and Greece's position in the middle of the European sovereign crisis. They explained that the big risk with downgrades in sovereign ratings is bank...