As if there wasn’t enough for Eurozone officials to worry about, Standard & Poor’s has followed Fitch’s lead and has downgraded Spain’s credit rating. S&P dropped Spain from a AA rating to AA-.
“Despite signs of resilience in economic performance during 2011, we see heightened risks to Spain’s growth prospects due to high unemployment, tighter financial conditions, the still high level of private sector debt, and the likely economic slowdown in Spain’s main trading partners,” S&P said.
Spanish 10-year government bond yields rose slightly in response, although they remained more than 60 basis points lower than those of Italy and, at 5.24 percent, some distance from the 7 percent level widely regarded as unsustainable.
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