Spain's sovereign debt rating has been significantly reduced by a leading agency amid growing fears about the country's ability to survive its current debt crisis.
It emerged yesterday (13 June) that Moody's has cut Spain's credit score by three notches from A3 to Baa3 on the grounds that the newly-agreed bailout of up to €100 billion ($125 billion) for its banks will increase its debt burden.
Indeed, the body indicated that the nation could face further downgrades in the coming three months as the Spanish government still has "very limited" access to international debt markets as the yield on its ten-year bonds carries on rising.
"The Spanish economy's continued weakness makes the government's weakening financial strength and its increased vulnerability to a sudden stop in funding a much more serious concern," it added.
This decision follows the pattern set by Fitch Ratings last week, which also downgraded Spain's sovereign debt by three notches to BBB.
By Gary Cooper