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What is Credit Rating
At that point it is usefull to know what that means in real terms.
Credit rating is used as a base for evaluation credit risk, ie how likely the debtor will pay back agreed sum. The lover the rating, the more likely debtor would default on the loan (declare himself to be unable to pay it back). The higher the risk, the bigger premium one extending credit asks.
Also, some categories of creditors, like retirement funds, are prohibited to invest in high-risk securities.
So, the for Spain it means two things: when they will take new debt, it's servicing costs will be higher (more premium for more risky deal) and the "pool" of potential creditors will be smaller ( will exclude investing companies that are prohibited to invest in securities rated under AA)
The thing not asked in any analysis: why Spanish government take more debts, why facing crisis, it still spends more than it can extract from (still) working population of the country.
This is also true for every single country out there - even China (difference for which is it can actually 'print debt away'- (which Spain cannot) which result in lesser net "load" shown in statistics).
And which bring us to U.S. of A, where people get oh-so angry on rating agency for lowering their credit rating, in true blue debt-junkie manner. (ignore addiction reality, ask for more, cheaper shots to keep "bad mojo" away)
For further reference:
S&P long term credit ratings:
Quote:
Long-term credit ratings
The company rates borrowers on a scale from AAA to D. Intermediate ratings are offered at each level between AA and CCC (e.g., BBB+, BBB and BBB-). For some borrowers, the company may also offer guidance (termed a "credit watch") as to whether it is likely to be upgraded (positive), downgraded (negative) or uncertain (neutral).
Investment...
