S&P lowers Spain

Standard & Poor's said it lowered the long-term sovereign credit rating on the Kingdom of Spain to BBB- from BBB+, along with its short-term sovereign credit rating to A-3 from A-2.

The outlook is negative.

The downgrade reflects the mounting risks to Spain's public finances due to rising economic and political pressures, S&P said.

The central government's policy responses are likely to be constrained by a severe and deepening economic recession that could lead to increasing social discontent and rising tensions between Spain's central and regional governments, the agency said.

The capacity of Spain's political institutions to deal with the severe challenges posed by the current economic and financial crisis is declining, which is the reason that S&P said it lowered the rating by two notches.

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