Ahead of an upcoming decision on Spain's sovereign debt rating, Moody's has decided to downgrade its rating for four nationalised banks controlled by the country's Fund for Orderly Bank Restructuring (FROB).

The subordinate debt and hybrid products by Bankia, BFA, Banc Catalunya, and Banco NCG now have a 'C' rating due to the losses anticipated for those debt holders. The Spanish government plans to impose some high haircuts on those debt securities.

Moody's also downgraded its ratings for Banco de Valencia's senior debt and deposit ratings to 'B3' and 'Caa1', respectively, due to a greater risk for main credit holders as a result of the restructuring process.

Other ratings remain under review for a possible downgrade, pending a decision on Spain's sovereign debt rating ('Baa3') expected later this month.

SC

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