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Moody's Cuts Debt Ratings Of 28 Spanish Banks

Moody's long-term rating on Banco Santander SA, the eurozone's largest bank by market capitalization, remains in investment grade despite a two-notch downgrade. The rating agency cited Santander's diversified holdings that reduce its exposure to the government's finances. Banco Bilbao Vizcaya Argentaria SA's new long-term rating is one notch below Santander's and just one notch above non-investment, or "junk" status.

The debt of several others, however, is now considered junk. Those include Banco Popular Espanol, Bankinter SA and Bankia.

Moody's did say in a statement that the agency is encouraged by measures being taken by Spain to support its banks.

The rating agency's move came four days after the rating agency downgraded some of the world's biggest banks, including Bank of America, JPMorgan Chase and Goldman Sachs, reflecting concern over their exposure to the violent swings in global financial markets. Moody's also cut the ratings on seven German and three Austrian banks this month.

The downgrades haven't come as a surprise. But they come at a time of great uncertainty in the global economy. Europe's 17-nation currency union is under threat, the U.S. economy is slowing and the economies of India, Brazil and China are cooling.

EU leaders are meeting Thursday and Friday in Brussels for another summit aimed at reining in Europe's debt crisis. Debt-wracked Greece is looking to renegotiate some of the budget-cutting measures it has agreed to in exchange for continued support from international lenders. The summit comes just a week after Greece's new coalition government was formed following months of political turmoil and two inconclusive elections.

Two international audits last week found that Spain could need as much as $77 billion. The government wants the loans to go directly to the banks so that it won't be responsible for repayment in case of a default. That idea has met with resistance.

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