LONDON, Sept 5 (Reuters) - Ratings agency Moody's said on Monday that prolonged political deadlock in Spain would be negative for the country's credit rating.
Acting Spanish Prime Minister Mariano Rajoy failed for a second time on Friday to win parliament's backing to form a government, increasing the likelihood the country will have to hold another election.
"The political impasse increases the risk of a December general election, which would be the third within a year, and further weakens the prospects for structural macroeconomic and fiscal reforms," Moody's said in a report.
Moody's, which rates Spain Baa2 with a stable outlook, said the continued absence of a government undermines the country's ability to meet its fiscal targets and address structural weaknesses in its public finances.
It is next due to review the rating on October 14. (Reporting by Dhara Ranasinghe)