Standard & Poor's sank Spain's credit rating one notch, joining Fitch in a downgrade as it warned of the weak financials of its banking system, threats to its economic growth and high unemployment.
S&P's downgrade on Thursday and Fitch's last week took Spain's rating from AA to AA minus, their fourth-highest grade.
The lower a country's rating, the higher interest it must pay to issue its bonds.
"Despite signs of resilience in economic performance during 2011, we see heightened risks to Spain's growth prospects due to high unemployment, tighter financial conditions, the still high level of private sector debt and the likely economic slowdown in Spain's main trading partners," S&P said.
"The financial profile of the Spanish banking system will, in our opinion, weaken further with the stock of problematic assets rising further," it said.
The world's leading ratings agency warned of further downgrades, saying the long-term outlook of the rating for the eurozone's fourth-largest economy is negative.
The announcement followed an S&P downgrade Tuesday also to AA minus of 10 of Spain's financial institutions, including Banco Santander and BBVA, and unemployment at a record 21 per cent.
Italy, the eurozone's third-largest economy, has also recently been downgraded by the three largest ratings agencies, which also include Moody's.