Their summary rationale for the downgrade is as follows:
policy options. (2) Rising unemployment and spending constraints are likely to intensify social discontent and contribute to friction between Spain's central and regional governments. (3) Doubts over some eurozone governments' commitment to mutualizing the costs of Spain's bank recapitalization are, in our view, a destabilizing factor for the country's credit outlook.”
significant financial difficulties, tensions between the central and regional
governments are rising, leading to substantially diluted policy outcomes.
These rising domestic constraints are, in our view, likely to limit the
central government's policy options.”