SPAIN’S CREDIT RATING has been downgraded by major rating agency Moody’s because of what it calls a “considerable deterioration” in the country’s finances, Reuters reports.

Moody’s also said that the slow growth in the county’s economy would present challenges. However it said that Spain’s’ creditworthiness was “stable”, and added that it expected the government to meet its deficit reduction targets over the next two years.

Spain lost its top grade at Fitch Ratings in May and at Standard & Poor’s in January 2009.

Speaking to Bloomberg, Spanish Deputy Finance Minister Jose Manuel Campa said that the cut was based on “overly pessimistic” growth estimates.

Spain has introduced tough austerity measures to tackle the problems in its public finances. The country’s trade unions joined a pan-European strike on Wednesday to protest against the severity to the cuts.

Moody’s lead analyst for Spain, Kathrin Muehlbronner said the country’s economic growth is expected to average 1% annually over the next few years.

Despite the downgrade, the price of Spain’s 10-year bonds actually fell slightly today. Apparently reflecting relief among investors that the downgrade was not more severe, bonds dipped to 4.1% from 4.19%.

However, the country’s borrowing costs remains more than double the average rate compared with 2009.