Moody's Downgrades Spain's Debt Rating

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Moody's Investors Service downgraded the Spanish government's credit rating on Tuesday from "A1" from "Aa2."

The move by the agency came just four days after Standard & Poor's cut its rating on the nation's long-term debt.

Moody's also issued a negative outlook for the struggling nation's debt.

Spain is still in the throes of a two-year recession. Unemployment remains high, credit is tight, the banking sector is weak, and the private sector carries heavy debt.

The country is trying to address its credit problems. It continues to pay higher interest rates because investors believe it will be the next European country in need of a bailout.

Moody's said that even if a solution to the crisis is reached, it will take time for confidence in the nation's political cohesion and growth prospects to be fully restored.

Spain is the fourth largest economy in the Eurozone, the 12th largest in the world.

The move comes as European leaders are trying to make progress on the region's debt crisis that could threaten the financial system of the continent and spread to other parts of the world.

Moody's has also warned France it might review its credit rating.

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