MADRID (Dow Jones)–Moody’s Investors Service Inc. Thursday lowered its rating on Valencia further into junk territory and warned other Spanish regions of a possible downgrade, citing severe liquidity strains.
“As regions access to capital markets remains problematic, they are left with few funding options,” the ratings agency said.
Moody’s cut Valencia by two notches to Ba3 from Ba1.
In December, Valencia was a week late in repaying a EUR123 million debt to Deutsche Bank AG and failed to raise the full amount of a new EUR1.8 billion bond issue.
In highly decentralized Spain, regional governments control around a third of spending. But, faced with gaping budget gaps and towering debt loads, they have faced mounting difficulties to finance themselves.
-By Jonathan House, Dow Jones Newswires, +34 91 395 8121;
jonathan.house@dowjones.com
via Moody’s Downgrades Spain’s Valencia Region Further Into Junk – WSJ.com.
Another day in paradise 