http://www.bloomberg.com/apps/news?pid=20601110&sid=aQ665PeDpnSw
Spain Has Debt Outlook Cut By S&P as Recession Hurts Deficit By Emma Ross-Thomas Dec. 9 (Bloomberg) -- Spain had the outlook on its debt grade lowered by Standard & Poor’s as its public finances worsen, one day after Greece’s government bonds tumbled following a downgrade by Fitch Ratings. S&P, which cut Spain from AAA to AA+ in January, said the country will experience a “more pronounced and persistent deterioration” in its budget and a “more prolonged period of economic weakness,” than it expected at the start of the year. The outlook was lowered to “negative” from “stable” and that “reflects the risk of a downgrade within the next two years,” S&P said in a statement. The yield on the 10-year Spanish government bond rose 4 basis points to 3.8 percent. Bonds from Dubai to Greece have tumbled in the past two weeks on concerns that some governments will struggle to patch up their finances after the worst global recession since World War II. Greek 10-year government debt today slid for the fifth straight day. The extra interest, or spread, that investors demand to hold Spanish debt rather than German equivalents rose to 66.6 basis points from 60.7 basis points yesterday. “Ultimately they will be downgraded,” said Harvinder Sian, a senior strategist at Royal Bank of Scotland Group Plc in London. “The government has to display that it’s getting serious.” S&P said there is “time for the government to forge a political consensus supporting a credible fiscal consolidation.” S&P put Greece’s debt on watch for a downgrade two days ago, and Fitch Ratings followed yesterday by cutting its credit rating one level from A- to BBB+. To contact the reporter on this story: Emma Ross-Thomas at [email protected] Last Updated: December 9, 2009 09:55 EST [Non-text portions of this message have been removed]
