Spain's credit rating downgraded on bailout concerns
The European stock markets have opened today (June 8th) to the bleak news that Spain's credit rating has been downgraded.
Fitch slashed the country's grade by three points to BBB - which indicates the organisation thinks its ability to honour its debts has weakened.
The agency also estimated the Spanish banks will need at least €60 billion (£49 billion) - or even €100 billion - to repay all that it owes.
It is feared Spain will require a considerable bailout from its eurozone partners as it struggles to keep its head above water.
Yesterday the nation enjoyed some good news when a bond auction received strong demand - a sale that was considered to be a key test for the country's ability to raise funds.
The Iberian country sold €2.1 billion (£1.7 billion) in long and medium-term bonds.
However, Spain did have to pay higher interest than before, with the rate on the ten-year Spanish bonds being 6.04 per cent - up from 5.74 per cent from a sale in April.
This higher rate indicates weakening confidence in Madrid's ability to repay what it owes - and this view was highlighted by the Fitch downgrade.
Nevertheless, the results of the auction show Spain is not locked out of credit markets altogether, after its finance minister Luis de Guindos said earlier in the week that they were "effectively shut" to the country.
On Monday (June 11th), a report from the International Monetary Fund is expected to show Spain's banks will need a minimum of €40 billion to repay its debts.
At open the Madrid IBEX was down 0.6 per cent to 6394.4 points, while the Frankfurt Dax gained 0.8 per cent to an index value of 6144.2 and the Cac 40 in Paris rallied 0.4 per cent to 3071.1 - weathering the ongoing eurozone financial storm.
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