Spain follows Greece’s footsteps into a severe debt crisis as Standard and Poor’s rating agency cut Spain’s debt rating following a possible further deterioration of Spain’s budgetary position.
Spain’s long-term sovereign debt rating was downgraded from AA-plus to AA with the addition of “negative outlook”.
The rating agency also announced that Spain’s debt rating could face further downgrade’s if the “budgetary position under performs to a greater extent than we currently anticipate.”
One of the looming dangers is that, unlike Greece, Spain has an economy too big to bail out if it faces serious trouble. Greece faces debt payments of 45 billion euros due on May 19th which it says it cannot pay, raising alarm bells in the financial wolrd that Greece is on the verge of complete financial collapse.
Other countries facing fears of financial turmoil include Portugal and as a result indirectly also its creditors, the UK and the US.
Professor Nouriel Roubini, who was one of a handful who anticipated the extent of the financial crisis, told a panel in California that “While today markets are worried about Greece, Greece is just the tip of the iceberg,”. The risk of infection amongst European countries is “amplifying”.
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