Spain’s BBB+ credit rating, three steps from junk, was affirmed at Standard & Poor’s, which said it expects the nation to continue receiving support from European peers and the European Central Bank.
The outlook is negative and the nation may miss its budget- deficit target of 6.3 percent of gross domestic product this year as the recession undermines tax collection, the company said in a statement today. Debt will remain below 80 percent of GDP beyond 2015 as loans to struggling banks will be “mutualized” among euro-area governments, it said.
S&P said its “baseline scenario” is that Spain “will continue to receive support, including financial, from its European partners and the ECB.” Spain is “vulnerable to delays or setbacks in the euro zone’s plans to pool sufficient common resources,” it said.
Spain sought a European bailout for its banks in June of as much as 100 billion euros ($123 billion) as the government lacked the financing to shore up its lenders. Prime Minister Mariano Rajoy is fighting to keep enough access to markets to fund the deficit, and has called for the ECB to buy Spanish bonds and for EU nations to take steps to bring down borrowing costs.