On July 7, 2004, Standard&Poor's Ratings Services lowered the long-term issuer credit rating on the Italian City of Milan to 'AA-' from 'AA', following the downgrade of the Republic of Italy to 'AA-' from 'AA'. The outlook is stable. This rating action acknowledges the continued strong interaction between the Republic of Italy and its local and regional governments (LRGs). The ratings on Milan will continue to be capped by that on Italy as long as the framework of intergovernmental relationships between central government and LRGs constrains the LRGs' managerial and financial autonomy. While the central government remains in a position to impose unilateral decisions that affect local and regional revenue and expenditure flexibility, this will continue to put
