Don't get Moody over Moody's

Moody's to downgrade Spain debt

Ratings agency Moody's announced today that it was planning to downgrade Spanish debt, currently at a "Aa2" rating, due to the country's budget problems.

Moody's said that the pressure on Madrid could be exacerbated by fears over the new European deal to rescue Greece which had "created a precedent" by involving the private sector and signaled a growing risk for investors holding bonds in the fragile countries of the eurozone.

At the same time, Moody's said it has decided to downgrade by a notch six Spanish regions, including the powerful Catalonia region, due to "the deterioration of their budgetary situation and their debt.

After a three-month examination period, the agency could lower Spain's rating, already downgraded in 2010, but it "would probably be limited to one notch", Moody's said.   We shall over come...