Moody's to downgrade Spain debt

29th July 2011, Comments 0 comments

Ratings agency Moody's announced on Friday that it was planning to downgrade Spanish debt, currently at a "Aa2" rating, due to the country's budget problems.

Moody's said that the pressure on Madrid could be exacerbated by fears over the new European deal to rescue Greece which had "created a precedent" by involving the private sector and signaled a growing risk for investors holding bonds in the fragile countries of the eurozone.

After a three-month examination period, the agency could lower Spain's rating, already downgraded in 2010, but it "would probably be limited to one notch", Moody's said.

At the same time, Moody's said it has decided to downgrade by a notch six Spanish regions, including the powerful Catalonia region, due to "the deterioration of their budgetary situation and their debt."

© 2011 AFP

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