US ratings agency Moody's has confirmed that it will conclude its rating decision on Spain by the end of September. If Moody's goes ahead with a rating cut, it would place Spain among the list of countries rated 'junk status'.

Moody's explained that it has not yet concluded its review because of pending information, especially on the banking sector's recapitalisation needs and the scope and size of the European Stability Mechanism that the country has at its disposal.

The rating agency also pointed to "potential changes" that may surface in the current crisis management as policymakers discuss issues such as a Europe-wide banking union. Additionally, it warned that it cannot rule out that Spain may need immediate action if its financing capacity deteriorates drastically and must search for external support beyond the banking sector's bailout programme.

Moody's has aggressively downgraded Spain's rating on June 13 from A3 to Baa3, only one notch above junk status and in par with the credit worthiness of nations like Namibia and Azerbaijan. Another rating cut would potentially boost the already high financing costs and further complicate president Rajoy's efforts to avoid a full bailout.

The three major agencies have the following credit ratings on Spain:

S&P: BBB with a negative outlook.
Fitch: BBB with a negative outlook.
Moody's: Baa3 with a negative outlook.

MD

Related share prices