Moody`s affrims Spain`s credit rating, but with negative outlook

Moody`s Investors Service decided on Wednesday to give a warm hand to Spain`s governments by affirming its investment grade rating of Baa3, shunning out concerns the debt-laden sovereign would be downgraded to junk rating before it probably asks for a financial lifeline.

The credit rating agency believes "the combination of a euro area and ECB support and the Spanish government`s own effect should allow the government to maintain capital market access at reasonable rates, providing it with the time it needs to stabilize public debt over the next few years."

Moody`s, however, assigned a negative outlook to the rating, still the decision to maintain its credit rating provided relief to the market, the euro and the troubled government of Spain, seen tapping a sovereign bailout next month. The euro hit a three-week high of $1.3122 on Moody`s affirmation.

Spanish Prime Minister Mariano Rajoy is still shy to ask for a full-packed rescue package to be discussed at a European summit in Brussels in the next two days and possibly at a separate summit of the 17 euro zone leaders following the main meeting, according to some officials.