Moody's Cuts Debt Ratings of 28 Spanish Banks

Country's busted real estate bubble leaves banks vulnerable, agency says
By Newser Editors and Wire Services
Posted Jun 25, 2012 5:13 PM CDT
Moody's Cuts Debt Ratings of 28 Spanish Banks
In this June 16, 2012, file photo, a demonstrator holds a life saver in front of the headquarters of Bankia bank during a protest against the Spanish bank in Madrid, Spain.    (AP Photo/Andres Kudacki)

Moody's Investor Service is cutting its credit ratings on 28 Spanish banks by one to four notches, saying the weakening finances of Spain's government is making it more difficult for that country to support its lenders. Moody's also said the banks are vulnerable to losses from Spain's busted real estate bubble. The announcement from Moody's came on the same day that Spain's government formally asked for help from its European neighbors in cleaning up its stricken banking sector.

However the request left many questions unanswered, including how much of a $125 billion loan package Spain would ask for. That uncertainty led to losses today in stock markets in the Europe and the US. Bond investors pushed Spain's borrowing costs higher, a signs of lagging confidence in the country's ability to support its banks. (More Moody's stories.)

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