Spanish sovereign debt has been downgraded by three notches from A to BBB by Fitch Ratings, which said the likelihood of external financial support is rising.
The agency cited what it called the recapitalisation needs of Spanish banks, which it put at around 60 billion euro (£48.6 billion), or even 100 billion euro (£80.9 billion) in a "high stress" scenario, a big increase in government debt if such a bailout does occur, continuing recession this year and in 2013, and a high level of foreign indebtedness that makes it very vulnerable to the crisis in Greece.
Fitch also said Spain's financing difficulties will make it hard for it to intervene decisively in a banking sector restructuring and thus raise the likelihood of outside external help.
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