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[url="http://finance.yahoo.com/news/Spain-debt-downgraded-by-apf-1816859080.html?x=0&.v=27"]Spain downgraded, Europe debt crisis widens[/url]

Germany says aid for Greece could be passed by May 7

The clock is ticking -- Greece has to pay off some euro8.5 billion worth of debts by May 19, but cannot raise the money in the markets given current sky-high borrowing costs -- at one stage earlier, the yield on the two-year Greek bond spiked up to a massive 23 percent.



That means it needs its 15 partners in the eurozone and the International Monetary Fund to cough up the money promised earlier this month, including euro8.4 billion from Germany.



The downgrade for Spain was an ominous new blow, coming just as markets were recovering their poise after the double shock Tuesday of a Standard & Poor's downgrade for Greece -- to junk status -- and Portugal.



Greece and Portugal, up to now the focus of alarm, are relative economic minnows; Spain's economy is four times the size of Greece and is considered by some to be too big to rescue.



Though its overall debt burden is fairly modest at around 53 percent of national income compared to 115 percent for Greece, the country is running a high budget deficit and has done less than others to get a handle on its public finances.



The agency said it was cutting Spain's rating to AA from AA+ amid concerns about the country's growth prospects following the collapse of a construction bubble.



"We now believe that the Spanish economy's shift away from credit-fuelled economic growth is likely to result in a more protracted period of sluggish activity than we previously assumed," Standard & Poor's credit analyst Marko Mrsnik said.



Spain still has an investment grade rating but could wind up paying more to borrow and may find itself under pressure to take tougher steps to cut spending.