Last Friday, May 28th, after the London Market closed, Fitch Ratings agency managed to spook the American Market by downgrading Spain's credit rating from AAA, the top grade to AA+.  This came after Standard & Poors also downgraded Spain from its rating of AA+ to AA last month.  The reason given was that Spain's economy will take longer to recover than other countries in the Eurozone.  This will make borrowing more expensive for Spain as it will need higher yields on its sovereign debt to attract investors.

June 16th

The FT reports that Spanish banks are finding it difficult to get funding from international markets. The expectation is that Spain will need to tap in to the new fund established in May by the European Stabilisation fund set up to help Greece and other members of the European Union who are in financial difficulties.  The Spanish savings banks, the cajas, which are local concerns have been badly hit by exposure to the ailing property market.

The bond yields on Spanish debt have remained at a reasonable level, benchmark 10 year bond yields are currently yielding 4.73%, this is a far cry from the Greek bond yields which rose above 10% at the height of the Greek debt crisis.