- Adrian Miller, a global markets strategist at GMP
The rating agency Standard & Poor's has downgraded Spain's credit rating by two notches to BBB-plus with a negative outlook from A, citing expectations the government finances will deteriorate.
"We think risks are rising to fiscal performance and flexibility, and to the sovereign debt burden, particularly in light of the increased contingent liabilities that could materialize on the government's balance sheet," S&P said in a statement.
"Obviously this is not a total surprise and it shows that the recent bid we have been seeing in Bunds and the weakening of Spanish bonds has been justified," said Adrian Miller, a global markets strategist at GMP in New York.
"Once we hit the 6.5 per cent mark, the alarm bells will go off loudly in Brussels and more rhetoric will be coming from the European Central Bank," said Mr. Miller.
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