S&P says Spain's rating unchanged after election

21st November 2011, Comments 0 comments

Standard & Poor's said Monday its credit rating for Spain was not affected by the election victory of the right-wing Popular Party, which promised to rescue the country from the eurozone debt crisis.

"In the run-up to the elections, PP announced that among its priorities in the economic policy area would be the reduction of outstanding fiscal imbalances along the lines of the existing budgetary deficit targets... and taming Spain's high unemployment, although it steered away from specifying the concrete underlying policy measures," S&P said.

"In our opinion, the clear majority PP obtained in yesterday's election could facilitate frontloaded implementation of reform measures," it said.

Even though stock and bond markets delivered Madrid a shellacking Monday after the poll results, S&P saw no reason to change its sovereign rating of AA-.

But it also kept the country on a negative outlook.

"Weak economic growth prospects due to ongoing private-sector deleveraging, high unemployment and labor market rigidities, and significant net external debt -- implying vulnerability to deterioration in external financing conditions -- have constrained the ratings on Spain."

Madrid's IBEX 35 index of leading shares plunged 3.5 percent Monday, dragged down by big Spanish banks, while the interest charged on 10-year government bonds climbed to 6.514 percent from 6.345 percent on Friday.

© 2011 AFP

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