S&P cuts Spain rating to BBB-

Standard and Poors (S&P) rating agency has downgraded Spain’s sovereign credit rating from BBB+ to BBB-, just a level above junk status.


S&P lowered the country’s credit rating by two notches with a "negative outlook" citing “mounting risks to Spain's public finances, due to rising economic and political pressures," the rating agency said in a statement issued late on Wednesday.

"In our view, the capacity of Spain's political institutions (both domestic and multilateral) to deal with the severe challenges posed by the current economic and financial crisis is declining, and therefore, in accordance with our rating methodology, we have lowered the rating by two notches," S&P added, warning Madrid of another impending downgrade.

A high rate of unemployment, social unrest, and tensions between the Spanish central and regional governments were also mentioned by S&P, among other factors.


“Overall, against the backdrop of a deepening economic recession, we believe that the government’s resolve will be repeatedly tested by domestic constituencies that are being adversely affected by its policies,” S&P noted.


Another rating agency, Moody's Investors Service, which has already lowered Spain’s rating to Baa3, has the country on review for a possible downgrade.


Battered by the global financial downturn, the Spanish economy collapsed into recession in the second half of 2008, taking with it millions of jobs. Unemployment is approaching 25 percent.


Source: Presstv