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Moody's downgrades 28 Spanish banks over debt concerns

Banks downgraded last night include one of the eurozone’s biggest – Banco Santander.

CREDIT RATINGS AGENCY Moody’s has downgraded the ratings of 28 Spanish banks including Banco Santander and Banco Bilbao Vizcaya Argentaria.

In its report on the decision, Moody’s cited concerns over the Spain’s’ ability to support the banks coupled with the risk of further losses to those banks from Spain’s ailing property market.

The ratings agency said that the banks’ exposure to the commercial real estate market “will likely cause higher losses”, increasing the chances of the banks needing external support.

The long-term rating for one of the eurozone’s biggest banks Banco Santander remains in investment grade after the downgrade, while Banco Bilbao Vizcays Argentaria is now just one notch above junk status. Several of the Spanish banks are now considered junk.

“The debt and deposit ratings declined by one notch for three banks, by two notches for 11 banks, by three notches for ten banks and by four notches for six banks. The short-term ratings for 19 banks have also been downgraded between one and two notches, triggered by the long-term ratings changes,” Moody’s said.

Yesterday, Spain formally requested a rescue loan of up to €100 billion from its eurozone partners to support its troubled banking system.

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