Moody's says it may downgrade Spain

Reuters

SYDNEY (Reuters) - Moody's Investors Service on Friday put the Spanish government's bond ratings on review for a possible downgrade, citing funding pressures and a precedent set by the euro zone's debt package for Greece.

Moody's said any change in the Aa2 rating would likely be limited to one notch.

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Moody's noted continued funding pressures facing the Spanish government and said the precedent set for future euro-area support by the Greece package was likely to exacerbate this.

It also saw challenges posed to the government's fiscal consolidation efforts by the weak growth environment and the continued fiscal slippage among several regional governments.

Moody's also placed the Aa2 rating of Spain's Fondo de Reestructuracin Ordenada Bancaria (FROB) on review for possible downgrade as the FROB's debt was fully and unconditionally guaranteed by the government of Spain.

(Reporting by Wayne Cole)