Moody's warned for negative outlook on Spanish credit rating

International rating agency Moody's warned today that tension over Catalonia independence efforts would undermine the country's credit rating. The agency said the tightening of tensions had a negative impact on credit ratings, which could get worse if the Catalonia's regional government declares independence after saying it was victorious in the local referendum, which was identified as illegal by Spain.

Moody's noted that Catalonia is unlikely to become independent, especially because it is unclear whether the majority of citizens want independence. Participation in the referendum on Sunday is assumed to be 42%. The rating agency expects both sides to reach an agreement on greater autonomy of the area.

Moody's points out that Catalonia represents about a fifth of the Spanish economy and has a high gross domestic product per capita. So the potential independence of the region will seriously affect Spain's public finances.

<iframe width="800" height="580" frameborder="0" scrolling="no" src="https://marketools.plus500.com/Widgets/InstrumentChartContainer?hl=en&cty=GB&isNT=False&id=56435&tags=widg+chart&pl=2&instSymb=IBX"></iframe>