Moody's lowers credit rating of Spanish banks and regions

Ratings agency Moody's on Thursday lowered the creditworthiness of 10 of Spain's autonomous communities and the country's major banks including Santander, BBVA and CaixaBank. The move comes a day after the agency cut Spain's sovereign debt rating from Aa2 to A1. Moody's cited "poor accounting and inadequate controls" for their decision to lower the rating for the region of Castilla la Mancha by five levels from A3 to Ba2. Meanwhile, Catalonia and Valencia have also had their ratings lowered along with Madrid, Galicia, Extremadura, Castilla-Leon, Andalusia, Murica and the Basque Country. Poor liquidity and lack of checks and balances in the regions' budgets are said to be the cause for the credit downgrade, although Moody's praised the spending cuts introduced in Catalonia to reduce its deficit. Banco Santander, BBVA and CaixaBank have all seen their ratings cut from Aa2 to Aa3. Earlier this month, ratings agency Fitch had also downgraded the creditworthiness of these banks. The banks have suffered mainly because of the lack of investor confidence that Spain can reduce its national deficit. The country is also burdened by an unemployment rate of over 20 percent and low growth prospects. Although Wednesday's decision to downgrade Spanish debt had no effect on the stock market, Thursday's announcement has had a negative effect with stocks falling by 1.17 percent in the first hour-and-a-half of trading. Spain's risk premium also rose to 343 points.