Moody’s has downgraded the rating of Spain’s government bonds by two notches, citing the fact that no credible resolution has been found for the eurozone debt crisis.
Moody’s, which cut Spain’s rating from Aa2 to A1 with a negative outlook, also said that the difficulties faced by the Spanish banks wanting to borrow money meant it had further scaled back its growth forecast for the country.
The move comes only two days after Standard and Poor’s made the same decision. Moody’s said it would downgrade Spain further if any new government that emerged from next months’ elections did not continue plans to reduce the deficit.
Moody’s also threatened to change its outlook on France’s AAA rating from stable to negative.
Meanwhile, Standard and Poor’s has cut the credit rating of 24 Italian banks and financial institutions, pointing to eurozone concerns and dimming growth prospects.
S&P says the outlook for Italy was not easily reversible and that Italy’s bank would have to pay more to borrow money for many years.