Rating agency Moody's Investors Service cut its rating on Spanish government debt by three notches on Wednesday to Baa3 from A3, saying the newly approved eurozone plan to help the country's banks will increase the country's debt burden.
Moody's, which said it could lower Spain's rating further, also cited the Spanish government's "very limited" access to international debt markets and the weakness of the country's economy.
The rating is on review for possible further downgrades, which could come within the next three months.
A spokeswoman at Spain's Economy Ministry in Madrid declined to comment.
"The Spanish economy's continued weakness makes the government's weakening financial strength and its increased vulnerability to a sudden stop in funding a much more serious concern than would be the case if there was a reasonable expectation of vigorous economic growth within the next few years," Moody's said in a statement.
Euro zone finance ministers agreed on Saturday to lend Spain up to 100 billion euros to shore up its teetering banks, and Madrid said it would specify precisely how much it needs once independent audits report in just over a week.
Moody's rating puts it one notch above junk status. Standard & Poor's rates Spain two notches higher at BBB-plus with a negative outlook. Fitch Ratings cut Spain's rating by three notches on June 7 to BBB, one notch above Moody's, and put a negative outlook on the credit.
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