Fitch: Imperative that Italy retains market access (by Polya Lesova)

LONDON (MarketWatch) -- Fitch Ratings warned on Thursday that the crisis of confidence that has engulfed the euro zone and Italy "has driven Italian bond yields to levels that, if sustained, would place public debt on an unsustainable path." Italy's treasury debt redemption profile over the rest of this year and into January is moderate, but more than 36 billion euros ($48.5 billion) of medium-term bonds mature in February and 193 billion euros over the whole of next year, Fitch noted. "It is therefore imperative that Italy retains market access," the ratings agency said. If the Italian government loses market access, which is not Fitch's base case, the nation's ratings would be cut, most likely to the low investment-grade category. "There is a window of opportunity for the new Italian government to generate a positive surprise that would, if supported by European policy action including intervention by the ECB [European Central Bank], break the negative market dynamics and shift bond yields towards a more sustainable level," Fitch said. Mario Monti is leading a new technocratic government in Italy.