Spain downgraded to BBB-

As we have said it before, Espana, everything under the sun. S&P just downgraded Spain to BBB-.

• The deepening economic recession is limiting the Spanish government’s policy options.
• Rising unemployment and spending constraints are likely to intensify social discontent and contribute to friction between Spain’s central and regional governments.
• Doubts over some eurozone governments’ commitment to mutualizing the costs of Spain’s bank recapitalization are, in our view, a destabilizing factor for the country’s credit outlook.
• We are therefore lowering our long- and short-term sovereign credit ratings on Spain to ‘BBB-/A-3′ from ‘BBB+/A-2′.
• The negative outlook on the long-term rating reflects our view of the significant risks to Spain’s economic growth and budgetary performance, and the lack of a clear direction in eurozone policy.

Full report here.