Outlook: Observation
Action date: 04/03/2020
Rating action: Affirmed


We maintain our credit rating of A for the Kingdom of Spain and change our outlook from "stable" to "under observation" with negative implications due to the economic scenario presented for 2020, strongly conditioned by the economic effects of the health crisis that has forced a large part of the activity to halt and whose duration is directly linked to the evolution of the health crisis that could end up causing a greater deterioration than expected on public finances. Our rating considers the positive starting point of the Spanish economy in order to face this uncertain scenario, with a household and corporate debt at lower levels than the ones presented during the previous economic crisis. A persistent current account surplus, a more dynamic labour market, a context favoured by the application of ultra-expansive monetary policy and low oil prices. However, the rating is constrained by the expected deterioration of the public financial accounts that already lacked fiscal room, with a deficit that is expected to double that recorded in 2019 and a public debt that again will exceed 100% of GDP.


Date last rating: 04/03/2020
Date first rating: 10/26/2018