According to Yra Harris, the global macro trader,
The ratings agencies are awakening to the idea that there are major problems in the European sovereign debt markets. Moody´s downgrade is insignificant as Spain still holds a comfortable investment grade, Aa2, so from a financial viewpoint the demerit is a mere mark on its transcript. Rather than affecting Spain, the move by Moody’s raises the question: where have you been?
Spain is toiling under the effects of a real estate bust that has crushed the Spanish banks and burdened the private and public sectors with a credit hangover. The Spanish policy makers have to rein in public spending while the economy is experiencing unemployment rates of more than 20 per cent. Consumers are burdened by the debt left from the property crash, which made the U.S. housing bubble rational in comparison.