Spain is in deep trouble. Ahead of a planned refinancing of its banking sector, the ratings agency Moody's has downgraded the country's debt.
As far as the markets are concerned, the entire Iberian peninsula is overburdened with debt. Portugal is already considered a sure-fire future candidate for a European bailout. Spain, which has considered itself too big to fail, could be closer than it thinks to a rescue.
Spain's problem, like Ireland's, is a banking and property sector burdened with hundreds of thousands of unsold properties, many of them still listed on balance sheets as high-grade assets when they are in fact worth a fraction of their former value – and in effect junk.
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