The rating on the Italian City of Milan (located in Lombardy, one of the country's most affluent regions) was lowered to 'A+' from 'AA-' on Oct. 19, 2006, reflecting the downgrade of the Republic of Italy (A+/Stable/A-1+) on the same date. The revision of the rating on Milan 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 for intergovernmental relationships between the central government and LRGs restricts the latter's managerial and financial autonomy. The rating continues to reflect Milan's good liquidity position, its above-average revenue flexibility by national and international standards,
