Advertisement

We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.

One famous Spaniard reacts to the news (not really) Vincent Thian/AP/Press Association Images
Spain

Downgraded: Moody's slashes Spain's credit rating

The downgrade comes on foot of an agreement reached at the weekend to bailout Spain’s troubled banking system.

THE CREDIT RATING agency Moody’s downgraded Spain’s sovereign credit rating by three notches tonight, days after the government sealed a deal to borrow €100 billion for its troubled banking system.

The agency said that the new loans, the details of which have yet to be finalised, will increase the country’s debt burden at a time when it already has limited access to normal financial lending markets.

“This will further increase the country’s debt burden, which has risen dramatically since the onset of the financial crisis,” Moody’s said, setting the new rating at Baa3 from A3.

This new rating is one notch above  ’junk’ status.

The yield on Spanish 10-year bonds hit 6.8 per cent yesterday as the deal announced at the weekend did little to allay the fears of investors who worry that the bank bailout will not be enough to save Spain.

In issuing news of its downgrade this evening, Moody’s also cited the continued weakness of the country’s economy where unemployment is around 24 per cent and economic growth is stagnant.

“While the details of the support package have yet to be announced, it is clear that the responsibility for supporting Spanish banks rests with the Spanish government,” Moody’s said.

- with reporting from AFP

Spanish bailout: what we know so far

Spanish bailout is a win for Spain, says Prime Minister

Your Voice
Readers Comments
22
    Submit a report
    Please help us understand how this comment violates our community guidelines.
    Thank you for the feedback
    Your feedback has been sent to our team for review.