Spain’s credit rating was cut for the third time in 13 months by Moody’s Investors Service as Europe’s debt crisis threatens to engulf the nation.
Moody’s yesterday reduced its ranking to its fifth-highest investment grade, cutting it by two levels to A1 from Aa2, with the outlook remaining negative. Standard & Poor’s downgraded Spain on Oct. 14 to its fourth-highest investment grade, and Fitch Ratings cut it to the same level on Oct. 7, the day it also downgraded Italy.
“Moody’s is maintaining a negative outlook on Spain’s rating to reflect the downside risks from a potential further escalation of the euro-area crisis,” it said in a statement. The company cited the “continued vulnerability of Spain to market stress” that is driving up the cost of borrowing, as well as weaker growth prospects. Spanish bonds were little changed.
Spanish and Italian bonds are being pummeled as euro leaders fail to convince investors they can contain the debt crisis and shore up banks to withstand the risk of a Greek default. German Chancellor Angela Merkel said yesterday that a European Union summit Oct. 23 will mark an “important step,” though not the final one in solving the sovereign debt crisis.....read on
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