Spain sees credit rating downgraded

Moody's downgraded its credit rating on Spain today, citing worries over the cost of the banking sector's restructuring and the government's ability to achieve its borrowing reduction targets.

The agency said it was reducing its rating by one notch to Aa2 and warned that a further downgrade could be in the offing if there were indications that Spain's fiscal targets will be missed and if the public debt ratio increases more rapidly than currently expected, or if the funding requirements for the so-called savings banks - the cajas - are greater than anticipated.