On Aug. 8, 2005, Standard&Poor's Ratings Services revised its outlook to negative from stable on the City of Milan, located in Italy's northern region of Lombardy (AA-/Negative/--). At the same time, the long-term issuer credit rating on Milan was affirmed at 'AA-'. The revision, which is the same as that carried out by Standard&Poor's today on the Republic of Italy (AA-/Negative/A-1+), acknowledges the continued strong interaction between the sovereign and its local and regional governments (LRGs). The rating and outlook on Milan will continue to be constrained by those on the Republic of Italy as long as the framework of intergovernmental relationships between the central government and LRGs restricts the latter's managerial and financial autonomy. The
