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Moody's Puts Spain's Aaa Sovereign Rating On Review For Possible Downgrade

(RTTNews) - Moody's Investors Service said Wednesday that it has put Spain's Aaa local and foreign currency government bond ratings on review for possible downgrade.

The rating agency said its decision was prompted by the deteriorating economic growth prospects, the challenges the government faces in achieving its fiscal targets and concerns over the impact of rising funding costs over the medium term. "If at the conclusion of the review, Spain's ratings are lowered, it would most likely be by one, or at most two, notches," Moody's said in a statement.

The rating agency plans to conclude its review within three months.

Moody's noted that the review will assess the broader political commitment to structural reform and the likelihood that the reforms approved by parliament will be far-reaching enough to significantly stimulate long-term growth.

The rating agency will also consider the contribution from the country's regional and local governments towards the fiscal consolidation effort.

Moody's last rating action affecting Spain was implemented on 29 July 2009, when the rating agency affirmed Spain's Aaa local and foreign currency government bond ratings and their stable outlook.