Spain likely to lose Aaa rating; US needs clear plan: Moodys

Written by Bloomberg | Updated: Aug 1 2010, 04:47am hrs
Spain will probably lose its Aaa credit rating after the country was put under review for possible downgrade in June, and the US needs a clear plan to tackle its deficit, Moodys Investors Service said.

Spain is very highly rated and I cant say where that rating will end up, but its likely to go down a bit, Steven A Hess, senior credit officer at Moodys, said in an interview in Sydney on Thursday. In the US, slower growth may hinder government efforts to address the budget shortfall, he said. The Spanish government is trying to cut the third-largest budget deficit in the euro region while returning to growth after an almost two-year recession.

Spains classification may be lowered as much as two grades, Moodys analysts said June 30, citing deteriorating economic prospects and the challenges the government faces to achieve its fiscal targets. Were watching the governments measures that they are implementing and well probably try to put that rating at the level we think it should belong for some time to come, Hess said. We dont see it moving down as many notches as Greece did.