The lowering of Spain's long-term rating reflects our view of: Spain's uncertain growth prospects in light of the private sector's need to access fresh external financing to roll over high levels of external debt amid rising funding costs and a challenging external environment; The likelihood of a continuing deterioration in financial system asset quality as reflected in the recent revision of our Banking Industry Credit Risk Assessment score for Spain to group 4 from group 3 (see "Spain Banking Industry Country Risk Assessment Revised To Group 4 From Group 3 On Heightened Economic Risk", published Oct. 11, 2011); The incomplete state of labor market reform, which we believe contributes to structurally high unemployment and which will likely remain a drag
