S&P Downgrades Spain To AA- With A Negative Outlook

Spain Fail Bull

S&P just downgraded Spain’s long-term rating to AA- from AA. It affirmed Spain’s short-term rating of A-1+.

The euro dipped briefly to $1.3735 on the news, but has since recovered the modest decline.

This comes two days after S&P downgraded Spain’s banking sector.

This also comes a week after Fitch downgraded its rating on Spain by two notches to AA-.

From S&P’s press release:

  • Spain’s uncertain growth prospects in light of the private sector’s need to access fresh external financing to roll over high levels of external debt amid rising funding costs and a challenging external environment;
  • The likelihood of a continuing deterioration in financial system asset quality as reflected in the recent revision of our Banking Industry Credit Risk Assessment score for Spain to group 4 from group 3 (see “Spain Banking Industry Country Risk Assessment Revised To Group 4 From Group 3 On Heightened Economic Risk”, published Oct. 11, 2011);
  • The incomplete state of labour market reform, which we believe contributes to structurally high unemployment and which will likely remain a drag on economic recovery.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.