Spain Defies Downgrades |
| Wall Street Journal - Oct 11, 2012 |
Spanish officials said they were caught off guard by a credit downgrade that left the country teetering a notch above junk status at two of the three main rating firms, but said the move was unjustified and wouldn't affect their plans to raise money on financial markets.
Financial analysts said Wednesday's move by Standard & Poor's Ratings Services could increase market pressure on Spain, one of the euro zone's most-fragile economies, to seek a European Union bailout. While Spain's leaders gave no hint Thursday that they were any closer to such a decision, the downgrade could put the bailout issue on the table when heads of EU governments gather in Brussels for a summit next week.
S&P's decision was the latest jolt for a government plagued by ailing banks, 25% unemployment, and a pro-independence push by Catalan nationalists unhappy with the effects of austerity measures on their wealthy northeastern region.
The U.S.-based firm cut its rating on Spain to triple-B-minus from triple-B-plus, citing concerns about the country's deepening recession. By stating that Spanish government bonds are a riskier asset to hold, market analysts said, S&P's downgrade may scare off some investors, making it more expensive for the government to borrow money.
Read Full Article from Wall Street Journal
- Posted: 2012-10-11 16:58:04
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