Skip to comments.Spain downgraded by S&P (heading towards "junk" status)
Posted on 10/10/2012 4:32:09 PM PDT by Signalman
Standard & Poor's lowered its credit rating for Spain on Wednesday, in a move that could complicate Madrid's effort to avoid requesting a financial bailout.
S&P cut Spain's long-term credit rating two notches to "BBB-" from "BBB+," the ratings agency said in a statement. It also lowered the nation's short-term rating and said the long-term outlook for Spain is negative, meaning it could lower the rate further.
The move reflects the risk of "increasing social discontent" as the Spanish economy slips deeper into recession, according to S&P. It also warned of "rising tensions" between the central government and Spain's semi-autonomous regions.
A growing number of Spain's 17 regional governments have requested bailouts from the central government in Madrid. Catalonia, the largest of region, has threatened to secede.
"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," said S&P. "Accordingly, we think the government's room to maneuver to contain the crisis has diminished."
n addition, S&P warned that the latest plan to recapitalize Spanish banks "still lacks predictability."
Spanish banks need to raise a total of 60 billion to fill the hole left by the bursting of the nation's property bubble, according to a recent audit. Euro area finance ministers agreed in June to provide up to 100 billion in bailout loans to recapitalize Spain's banking sector.
(Excerpt) Read more at buzz.money.cnn.com ...
Well, at least they’re the “greenest” of the PIIGS countries.