Today's Coming Crisis Movie

Friday, July 29, 2011

Moody's creates more trouble for Spain as debt is further downgraded

Moody's Investors Service downgraded six regions of Spain on Friday, and warned that other regions could also face a downgrade.

The credit ratings agency issued the downgrade because of the regions' dismal fiscal performance, and the difficulties expected in their attempts for recovery.

Moody's downgraded the long-term ratings by one notch for Castilla-La Mancha, Comunidad Autonoma de Murcia, Valencia, Catalonia, Junta de Andalucia and Junta de Catilla y Leon.

The rating agency said the downgrades "reflect the deterioration in their fiscal and debt positions," as well as the difficulties the regions are expected to face in dealing with their deficits.

Moody's also placed seven Spanish regions under review for downgrade, including the regional governments of Extremadura, Galifica and Madrid, as well as the Basque region.

The ratings agency said it would "view positively any strong signs of improvement" in the regional "budget trajectories," or a decrease in debt. (more)