MADRID (AP) — Spanish stocks dropped sharply early Friday morning after ratings agency Moody's downgraded its credit score of 16 Spanish banks in the latest blow to the troubled financial sector.
Moody's acted late Thursday, citing banks' load of non-performing loans amid a recession-plagued economy, their trouble raising financing on capital markets and the government's sovereign debt problems, among other woes.
Spain is in the eye of the storm of the eurozone debt crisis amid worries that its banks are overexposed to an imploded real estate bubble and the government, fighting recession and a nearly 25 percent jobless rate, could not afford to bail them out if it needed to.
The country's Ibex 35 index was off more than 2 points shortly after trading began Friday. Banks were among the biggest losers. But both the index and bank stocks recovered later. Banco Santander, SA and Banco Bilbao Vizcaya Argentaria, SA were up more than three points. Both were mentioned in the downgrade.
Shares in Bankia SA, a recently nationalized bank, took a roller coaster ride Thursday, ending up sharply lower on reports depositors pulled out a €1 billion in a week. But they were up 9 percent in early trading Friday. On the bond market the interest rate on 10-year bonds was down six basis points at 6.23.