Moody's may Spain debt cut

MADRID - Moody's investors said service on Wednesday it can his reviews on Spanish government debt, citing the country to refinancing needs next year and a complicated prospects for banks and downgrade regional Governments of the country.

Mike Casey explains how Moody's announcement that it Spanish government debt, downgrade may, citing the loads in restructuring process Spanish banks.

The credit rating agency local and foreign currency put on review for downgrade of the AA1 ratings on the debt of the Spanish Government and Government guaranteed Bank Bailout funds. European government bonds from small pointed out the move concerns about the spread of the crisis, financially stressed the euro zone core closer to euro zone members like Greece on larger economies.

Moody's downgraded "needs Spain susceptibility to funding stress given its high refinancing in 2011," said could be raised an issue that trust recently from sensitive market been strengthened.

"Obviously, the confidence of the market has changed since September," Moody's Spain's credit rating by a stepping stone AA1 downgraded, Kathrin Muehlbronner, Moody's lead analyst for Spain, said in an interview. Currently Moody's said it was concerned about the country's weak growth prospects and challenges for fiscal consolidation

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In his statement Wednesday Moody's said that the Spanish Government about €170 billion ($ 227.48 billion) next year must increase. Regional governments also refinancing needs of around EUR 30 billion in 2011. "Moreover, Spanish banks, whose own financing depends on capacity partially of the fate of the Spanish sovereign the term to refinance debt in 2011 around €90 billion value" Moody's added.

Spanish made financing heights recently have euro era so nervous investors fretted early next year meet the Government's ability and banks, an avalanche of debt. Spain premium - measured of distribution of the Spanish capital market interest's 10-year about, that equivalent, the Federal Government - since the collapse of the Irish system banking jumped from his German.

Moody's was the last great credit rating company to evaluate Spain AAA maximum until September. It can downgrade Spain again within the next three months.

However, Moody's said it "believe that Spain solvency is threatened" and expect the Spanish Government to request support by the European financial stability facility for liquidity. The rating agency said that Spain's main funding requirements, "not only for the sovereign, but also for the regional Governments and banks make it vulnerable to more episodes of funding stress." This one of the drivers behind the review for possible downgrade is, "said Mrs Muehlbronner in Moody's statement."

Reuters Spanish Prime Minister Elena Salgado and José Luis Rodríguez Zapatero during a parliamentary session in Madrid on Tuesday.

A decade-long housing market Spain suffers from boom collapse that pushed its economy into a recession and sent its public accounts deep in the red. Its weak budgetary position links spread the European financial crisis-prone.

As reaction to pressure of markets and the European Union, Prime Minister José Luis Rodríguez Zapatero efforts deepened its double-digit budget deficit and an incentive to cut economic growth. Great political costs of Socialist Prime Minister by a strict budget, tax included forced hikes and deep spending this year and next cuts. Earlier this month, Mr Zapatero, announced to increase a series of economic measures € 14 billion by the partial privatisation of the National Lottery and AENA airport operators, and how to manage the airports of Madrid and Barcelona.

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