June 30, 2010 / 6:33 PM / 9 years ago

UPDATE 1-Moody's puts Spain Aaa rating on review for cut

(Adds S&P, Fitch’s latest action)

NEW YORK, June 30 (Reuters) - Moody’s Investors Service may cut Spain’s Aaa local and foreign currency government bond ratings by as much as two levels after it conducts a three-month review, it said on Wednesday.

Moody’s, the only major rating agency that still holds a top rating for Spain, said the possible downgrade reflects deteriorating short-term and long-term economic growth prospects, and the challenges the government faces in achieving its fiscal targets.

The rating agency also cited concerns over the impact of rising funding costs over the medium term.

“If at the conclusion of the review, Spain’s ratings are lowered, it would most likely be by one, or at most two, notches,” Moody’s said.

Fitch Ratings cut Spain’s credit ratings to AA-plus, the second highest level, from AAA on May 28, saying its economic recovery would be more muted than a government forecast, pushing world equities and the euro lower.

The downgrade followed a cut by Standard & Poor’s in April. (Reporting by Walden Siew and John Parry, Editing by Chizu Nomiyama and Jeffrey Benkoe)

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