Under the terms of the agreement with the eurozone to recapitalize the Spanish banking sector several Spanish banks are likely to receive government support, and holders of those banks' hybrids and subordinated debt will possibly absorb losses. We think that Spanish bank Bankia S.A. and its parent company Banco Financiero y de Ahorros S.A.'s (BFA) will have to amend their restructuring plan to comply with the clauses in the MoU concerning institutions receiving government capital support. We are downgrading to 'CC' from 'CCC-' our issue rating on Bankia's nondeferrable subordinated debt, and keeping our 'BB+' long-term rating on Bankia and our 'B+' long-term rating on BFA on CreditWatch negative. The CreditWatch placement reflects the significant uncertainties surrounding Bankia and BFA's
