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USA rating agency S/P downgraded Spain's debt by 2 levels...from A...to BBB+...as national unemployment neared 25%...the worst in 18 years...and nearly 30% in 4 provinces...while Madrid fell into official recession.
Observers believe that Madrid will need a E120 billion bailout before the end of the year.
Its banks are extremely weak due to bad debts from a glut of housing and commercial building loans.
S/P was negative about the near future for Spanish banks.
'It is not going to be an easy job for most Spanish banks to find funding in the market. So the state may be called for at some point. But that for now ate least is something the Spanish government seems unwilling to contemplate,' said the S/P announcement.
