S&P cuts Spanish credit rating again

12 October 2012

Standard & Poor's (S&P's) has cut Spain's sovereign credit rating to BBB-minus, citing the deepening economic crisis in the eurozone country.

The downgrade comes with a negative outlook, which reflects the agency's view that there are significant risks to economic growth and a lack of clear direction in eurozone policies.

Spain's government is now under pressure to accept rescue funds from Brussels.

S&P's two-notch downgrade from BBB-plus brings it in line with Moody's Investors Service's Baa3 rating.

Moody's announced in August that the debt rating of Spain would be under review for possible further downgrade.

The country has been in recession since earlier this year and unemployment currently stands at 25 per cent.

S&P's cited the increase in social unrest and the probable rise in tensions between different regions in the country and central government as other reasons for the downgrade.

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

By Gary Cooper

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