Spain’s credit rating has been downgraded to BBB-minus – in other words, just above junk status.
Standard and Poor’s say the country’s deepening economic recession is limiting the government’s policy options to stop the slide.
Falling tax revenues and rising welfare costs are threatening the government’s efforts to hit its 2012 deficit reduction target of 6.3 percent.
Moody’s also has Spain on review for a possible downgrade. Experts say this could push Spain closer to asking for a bailout.