After downgrading Spanish debt rating from A to BBB + last week, the international credit rating agency Standard & Poor’s punched again, lowering the debt ratings of 9 autonomous regions of Spain to negative. Also read: Standard & Poor’s lowered Spanish long-term sovereign credit rating to BBB+.
Among the 9 nine autonomous regions downgraded, Madrid, Galicia and the Canary Islands were lowered to BBB +; Andalusia and Aragon to BBB; and the Balearic Islands and Catalonia to BBB-, almost on the brink of “junk bonds”.
Under the influence of the debt crisis in Europe, Spain fell into a budget deficit predicament last year. The Spanish government demanded that the 2012 budget deficit level to be controlled within 5.3% and within 3% the next year. The average fiscal deficit of the local governments must be maintained below 1.5%.
Also read: Italian 10-year Treasury note rose to 5.85%.