S&P downgrades Spain's credit rating

Telegraph (UK) ^ | 10:23PM BST 10 Oct 2012 | By Rebecca Clancy

[DeaconBenjamin]

Standard & Poor's has downgraded Spain's credit rating by two notches, warning that the deepening economic recession is limiting the government's options.

S&P warned that rising unemployment and harsh austerity measures are likely to intensify social unrest and cause further friction between Spain's central and regional governments.

"The downgrade reflects our view of mounting risks to Spain's public finances, due to rising economic and political pressures.

"In our view, the capacity of Spain's political institutions to deal with the severe challenges posed by the current economic and financial crisis is declining, and therefore, in accordance with our rating methodology (see "Sovereign Government Rating Methodology And Assumptions," published June 30, 2011), we have lowered the rating by two notches."

The downgrade to BBB- from BBB+ late on Wednesday leaves Spain one notch above "junk" status. S&P also attached a "negative outlook", which warns of a possible downgrade in the medium term.

S&P said it would downgrade the country's debt status further if political support for Madrid's reform agenda weakens, if eurozone support fails to prevent Spain's borrowing costs hit unsustainable levels or if debt tops 100pc of economic output or debt payments surpass 10pc of general government revenues.

"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 said.

"Accordingly, we think the government's room to contain the crisis has diminished."

The euro fell against the US dollar after the news, trading down 0.1pc.

The downgrade comes after Spain announced five austerity packages in less than a year and is fighting for time to avoid a full-fledged rescue.

Concerns over the creditworthiness of the government have risen since the country requested €100bn (£80bn) in aid to bail-out its banks.

[KoRn]

I wouldn’t loan Spain $200.

Hell, I wouldn’t loan the United States $200. (I would just be getting paid back with a debased currency)

[DTogo]

Obama Green Jobs Con Job and the Ill Wind That Blows from Spain:

When I asked Professor Calzada about the genesis of Spain's green energy program he answered that it was the desire of Spanish political elites to be "world leaders" that drove the program -- and the Spanish economy off the cliff. Ironically, it was the Conservative Party in Spain that created the legislation that led to this disaster (it allowed so called feed-in tariffs to boost prices paid for renewable energy; California is among the states in America that have similar programs). But it was the socialists who used this law to create a vast renewable power industry fueled by government taxing, borrowing, and spending.

[MSF BU]

Well if you have loved ones with nonfederal pensions that’s exactly what they will be getting back.

[MSF BU]

Well if you have loved ones with nonfederal pensions that’s exactly what they will be getting back.