S&P cut Spanish debt from BBB+ to BBB-, one level above junk status, and warned of possible further downgrades.
Spain is struggling with high debt levels and the highest rate of unemployment in the eurozone.
Madrid has introduced drastic spending cuts and tax rises, but many think it will have no option but seek a bailout.
“The downgrade reflects our view of mounting risk to Spain’s public finances, due to rising economic and political pressures,” S&P said.
“The deepening economic recession is limiting the Spanish government’s policy options.”
Last month, the government unveiled its latest budget designed to make savings of around 13 billion euros ($16.7 billion) next year, by cutting public sector wages, education, health and social services.
The cuts were the latest in a series of austerity measures that have sparked angry protests across Spain.
Despite the cuts, tax rises, labor market and pension reforms, the Spanish government has said the country’s overall debt levels will rise next year to more than 90% of total economic output.
The country’s borrowing costs have remained high for months, leading many analysts to argue it is only a matter of time before Madrid is forced to ask its eurozone partners for financial assistance.
However, last week, Spanish Economy Minister Luis de Guindos denied his country would be asking for help.
“Spain does not need a bailout at all,” he said.
At least five people, including a four-month-old baby, have been killed after dozens of tornadoes…
Harvey Weinstein has been hospitalized just days after his 2020 rape conviction in New York…
Hamas has published a video showing the first proof of life of US and Israeli…
Prosecutors and Donald Trump’s attorneys delivered opening statements and the first witness was called on…
The House of Representatives has finally approved $61 billion in new US military aid for…
The real estate market in the United States has always been a gauge for economic…