Spain Now in Recession (-0.3% Q1 GDP), S&P Downgrades Spanish Banks

Source: Spain's National Statistics Institute
After Spain reported a 24.4% unemployment rate on April 27, today Spain's National Statistics Institute reported that GDP declined by 0.3% during Q1 2012. Spain is now officially in a recession. Also, today S&P downgraded 11 Spanish banks today after they downgraded Spain's sovereign debt to BBB+ from A.

Spain's National Statistics Institute (

"According to the quarterly GDP advance estimate, during the first quarter of 2012, Gross Domestic Product (GDP) generated by the Spanish economy registered a real variation of –0.3%, as compared with the previous quarter, similar rate to fourth quarter 2011.

The interannual GDP variation was –0.4%, as compared with 0.3%, for the previous quarter. This behavior was due to the negative contribution by domestic demand, partly compensated by the positive contribution of foreign demand."

Reuters: TEXT-S&P takes negative rating actions on 16 Spanish banks (includes Banco Santander and BBVA)

"-- The sovereign downgrade has direct negative rating implications for the banks that we rate at or above the sovereign rating on Spain, and on most banks whose ratings incorporate uplift over their "stand-alone credit profiles" (SACP) to reflect Spanish government support.

-- In addition, the factors behind the downgrade of Spain could have potentially negative implications for our view of the economic risk and industry risk affecting the Spanish banking industry and for our analysis of specific rating factors that drive our SACP assessments on Spanish banks.

-- We are lowering our long- and short-term ratings on 11 banks. In addition, we are also placing on CreditWatch negative the long- and short-term ratings on six banks, and only the long-term rating on one bank. We are keeping the ratings on three banks on CreditWatch negative and the ratings on one bank on CreditWatch positive."