S&P downgrades outlook on Spain’s debt on pandemic hit
Washington-Ratings agency S&P Global cut the outlook on Spain’s debt to negative from stable and warned that the pandemic-hit economy will struggle to return to growth. Spain’s sovereign debt grade was affirmed at “A” but S&P said the caution on the outlook was driven by concerns the government will not pass a budget for the third straight year “and economic weakness could persist into 2021 and 2022.” “The pandemic has stopped growth in its tracks. We now estimate that for 2020, the economy will contract by 11.3 percent,” the ratings agency said in a statement. “We believe that the resulting economic pressures on Spain may have increased prospects of a political agreement this autumn for a 2021 budget, while building consensus behind the pro-growth reforms detailed in Spain’s National Reform Program.” The agency credited the stimulus measures with preventing an even deeper recession in the Spanish economy, but noted lingering risks, including the high government debt level.