NEW YORK, Sept 27 Ratings agency Egan-Jones on
Thursday cut Spain's sovereign rating further into junk status,
citing the country's faltering banks and struggling regional
The agency cut Spain to CC from CC-plus, deep into
speculative territory, for Egan-Jones' seventh downgrade of the
sovereign so far this year.
"Spain will inevitably be faced with (additional payments)
to support a portion (of) its banking sector and for its weaker
provinces," Egan-Jones said in a statement.
Spain has been in recession since earlier this year, its
second economic contraction in just a few years, and
unemployment is stubbornly high at close to 25 percent with a
return to job creation still two years away.
The country announced a detailed timetable for economic
reforms and a tough 2013 budget based mostly on spending cuts on
Thursday in what many see as an effort to pre-empt the likely
conditions of an international bailout.
"The rub is whether Spain will be able to cut enough to
obtain EU support (probably) and whether there will be an
eventual haircut for current debtholders (probably)," the
Egan-Jones statement read.
The Egan-Jones downgrade comes as markets are awaiting word
on a rating review from Moody's Investors Service, which is
expected to render a verdict on the country by the end of the
Moody's rates Spain Baa3, an investment grade rating - but
only barely. Standard & Poor's rates the country BBB-plus with a
negative outlook, and Fitch rates Spain BBB with a negative