S&P downgrades Barcelona city, Madrid region

Standard & Poor's downgraded the credit rating of the city of Barcelona and the Madrid region on Monday, a further blow to Spain whose sovereign rating was lowered last week due to its huge debts. The credit rating agency cut the two ratings by one notch from AA to AA-, with a negative outlook, in line with Spain's long-term rating. In both cases it cited "Spain's uncertain growth prospects" due to high debts and persistent unemployment. The city and regional authorities' ratings were dragged down by the cut in Spain's sovereign rating since they are heavily dependant on the central government for funding, Standard & Poor's said. "We therefore see no upside rating potential at this point" for Barcelona and Madrid, it said. The Spanish economy slumped into recession in the second half of 2008, battered by a global financial meltdown and the collapse of a property bubble. It stabilised in 2010 but growth remains anaemic.