Moody's: Spanish debt could be junk in three months

Moody's has downgraded Spain's credit rating by three notches to Baa3 from A3, just above junk status, and placed it on review for further possible downgrades.

The ratings agency also warned last night that Spanish debt could be relegated to junk status within three months. Moody's said Spain's decision to borrow €100bn (£80bn) from other eurozone countries to bail out its banks will "further increase the country's debt burden, which has risen dramatically since the onset of the financial crisis". Spanish benchmark 10-year bond yields have continued to rise this week despite the €100bn bailout announced over the weekend, rising to 6.9% this morning to set a new euro-era high. Moody's said the Spanish government had "very limited" access t...