Spain’s credit rating slashed three notches

Fitch Ratings last night slashed Spain’s sovereign credit rating by three notches, citing ballooning estimates of the cost of a banking crisis, mushrooming debt and a deepening recession.

The long-term rating was chopped to BBB from A and left with a negative outlook, said Fitch, swooping as expectations mounted that the EU would have to throw a lifeline to Spanish banks.

“The likely cost of restructuring and recapitalising the Spanish banking sector is now estimated by Fitch to be around €60bn and as high as €100bn in a more severe stress scenario.”