Moody’s credit agency appears to have Spain in its sights. Only one day after delivering a sovereign downgrade to the country it has now cut the debt ratings of ten of its regions.
Most were reduced by one or two notches but one region, Castile-La Mancha, was hit with a five point reduction.
The agency said that large financing needs alongside limited access to long term funding sources have forced the regions to deplete their cash reserves.
The news follows yesterday’s warning that Spain’s inability to fund its public deficit would be further exacerbated by slow growth, forecast at 1% GDP at best.
It will be a major challenge for whichever government wins the next general election in November.