Spain's sovereign debt rating cut by Moody's

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Spain's sovereign debt rating cut by Moody's

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Spain’s sovereign debt rating has been cut by three notches, to just above ‘junk’ levels.

The move, by rating agency Moody’s, comes four days after eurozone partners agreed to lend Madrid up to 100 billion euros to help shore up its stricken banks.

Spain’s Prime Minister, Mariano Rajoy, has been playing down the bailout.

“I think that Europe should have wider fiscal and banking integration. I am also hoping for a resolution of all financial and liquidity problems which are, at this time, strangling a lot of economies. I would like to see a debate and for decisions to be taken quickly,” Rajoy said.

Moody’s downgrade lowers Spain’s rating from ‘A3’ to ‘Baa3.’ The agency has also cut the sovereign rating of Cyprus – by two notches, to ‘Ba3.’

Meanwhile, Italy’s technocrat Prime Minister is pushing for a financial transaction tax to be implemented by as many countries as possible.

“Ideally this tax would have to be global, we all know how unrealistic it is to have a global agreement on tax matters, but I believe it should be for the European Union in geographical configuration, which is as wide as possible,” Mario Monti said.

Monti also appealed to Italy’s politicians to swallow his tough economic medicine, to avoid Rome becoming the next victim of the euro debt crisis.