Moody’s Downgrades 16 Spanish Banks

Responding to Spain’s worsening financial situation, Moody’s Investor Service downgraded the credit ratings of 16 Spanish banks on Thursday.

That followed downgrades for 26 Italian banks on Monday. It also follows similar downgrades of Spanish banks�by rival ratings firm Standard & Poor’s last month.

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Many banks in Spain continue to suffer from the after effects of a real estate bubble. The country fell back into recession earlier this year and faces reduced public spending and a rising national debt, Reuters noted.

Banks that saw their credit rating fall included Banco Santander, cut to A3 from Aa3, BBVA, which received an identical ratings reduction, and Caixabank which was cut three notches to A3.

Moody’s said that Spain’s economic outlook remained poor and that the Spanish government had limited resources to deal with the problem.

In February, Moody’s lowered Spain’s credit rating to A3 with a negative forecast.

While U.S. banks continue to have some exposure to Spain’s problems, the ratings services had given ample warning on Spain, analysts told Reuters, giving U.S. banks time to limit any potential fallout.