S&P Downgrades Italy

Standard and Poor's downgraded Italy by one notch to A/A-1 and kept its outlook on negative.

"It only adds to the contagion risk over Greece and has encouraged the flight to safety in markets here," he added, pointing to a sharp fall in the Australian dollar on the news.

Moody's seems to be playing politics rather than looking out for its clients.  It has refused to follow the S&P in the US downgrade, and said it was "still looking at Italy". 

Here is a fun list of the relative credit ratings of countries worldwide - find your country.   Here are the USA states - find your state

The credit rating is crucial to countries and states, as borrowing costs are directly related to what the rating reflects.  Remember the days of junk bonds?  They are still around, anything below AA+ is considered junk status.  You can now get junk muni-bonds for states like California, and countries like Argentina.