Iberian Peninsula faced a slew of downgrades from credit rating agencies

Iberian Peninsula faced a slew of downgrades from credit rating agencies on Thursday, after Fitch decided to cut its sovereign rating for Portugal by two notches to A- while downgraded 30 Spanish banks by one or more notches.

Portugal took center stage late into Wednesday’s session, as Prime Minister Socrates resigned after Parliament failed to pass his fourth round of austerity measures.  Socrates told his fellow lawmakers that failing to accept his austerity plan would lead to a bailout which would count with harsher deficit reduction plans.  Fitch’s director of sovereign ratings, Douglas Renwick, echoed Socrates’ statements, explaining “The downgrade reflects increased risks to policy implementation and fiscal financing in light of the Portuguese parliament’s failure to pass fiscal consolidation measures and the resignation of the Prime Minister on 23 March.