S&P has lowered Spain’s sovereign credit rating for the second time this year as the region’s economy diminishes.
Standard & Poor’s lowered Spain’s A to a BBB+, stating a negative outlook for the future. The country’s short term rating also fell to A-2 from A-1.
Ten years of borrowing costs in the nation have inflated as the economy contracts and unemployment abounds. Spain’s Prime Minister Mariano Rajoy is desperately trying to show investors that the situation is under control, but optimism is scarce as bad loans hit their highest marks in nearly twenty years.
“Spain’s budget trajectory will likely deteriorate against a background of economic contraction,” S&P stated. “At the same time, we see an increasing likelihood that Spain’s government will need to provide further fiscal support to the banking sector. As a consequence, we believe there are heightened risks that Spain’s net general government debt could rise further.”
In the meantime, Luis de Guindos, Spain’s Minister of Economy, rejects the issue of external aid. He claims that Spanish banks have no need of it, now will it require a bailout from other EU partners.
“Nobody has asked Spain, either officially or unofficially,” he said. “We don’t need it.”
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