R and I downgrades Spain’s credit rating

Date: Tuesday 29 May 2012

Japanese ratings agency Rating and Investment Information (R and I) has cut Spain’s credit rating to 'A' from the previous 'AA' while keeping the country under review for a possible further downgrade.

The A rating is defined by the company as “high creditworthiness supported by a few excellent factors.”

The agency notes that it has taken this action due to the deteriorating fiscal environment and financial market turmoil while adding that it expects the country’s growth to continue to fall in the mid-term.

“As the economic circumstances have deteriorated, Spain's fiscal deficit in 2011 far exceeded a target despite the government's fiscal consolidation efforts.

"Although the government has put in place initiatives to stabilise the financial system, which, for example, require additional provisions, concerns about capital shortages in the banking sector are lingering,” it said.

MG

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