Standard & Poor’s cuts down Barcelona credit rating

Standard & Poor’s cuts down Barcelona credit rating. (file photo)

(PressTV) Standard & Poor’s (S&P) Ratings Services has downgraded Spain’s Barcelona Province’s credit rating by two notches, leaving it just one level above junk-bond status. 

On Tuesday, the New York-based rating agency slashed Barcelona’s rating to BBB- from BBB+, nearly a week after it downgraded Spain’s sovereign credit rating by the same margin.

“The province depends on the central government for 85 percent of its operating revenue, limiting its financial independence and ability to withstand a sovereign stress scenario,” the agency said.

“Moreover, local governments in Spain have, in our view, a limited ability to oppose any unwanted changes to their institutional framework. Consequently, we apply a sovereign cap to the rating on Barcelona,” it added.

Earlier in the day, Standard & Poor’s also downgraded credit ratings of seven Spanish banks including Santander and BBVA, which are the country’s biggest banks.

The agency said that local governments can appreciate a rating one notch stronger than the sovereign debt only when they have stronger finances, but this is not the case with Barcelona Province.

Another rating agency, Moody’s Investors Service, which has already lowered Spain’s rating to Baa3, has placed the country on review for a possible downgrade.

The country’s economy is expected to shrink by about 1.5 percent this year.

Battered by the global financial downturn, the Spanish economy collapsed into recession in the second half of 2008, taking with it millions of jobs.

MKA/JR

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