Spain’s credit rating was cut to Aa2 by Moody’s Investors Service, which said the cost of shoring up the banking industry will eclipse government estimates. The euro weakened and Spanish bond yields rose.
Spanish lenders will need as much as 50 billion euros ($69 billion) to meet new capital requirements, Moody’s forecast, more than double the 20 billion euros seen by the government. The risks to public finances are “skewed to the downside,” the company said in a statement today. The outlook is “negative,” suggesting more rating cuts are under consideration.