Huge financial challenge for Spain
BBC business editor Robert Peston on a big test for the eurozone
Moody's highlights three substantial financial challenges for Spain, in explaining why it may downgrade the kingdom's credit rating.
First is simply that the central government has to raise and refinance a very substantial sum in 2011, some €170bn.
That won't be particularly easy at a time when investors' appetite for eurozone debt isn't what it was - especially since the Spanish government has historically been dependent on overseas buyers for about 50% of all the money it raises.
On top of that €170bn is €30bn of regional debt that needs to be refinanced next year, and a further €90bn of long term borrowings by the banks which has to be replaced.
So if nothing bad were to happen to force Spain to raise even more money, it will need to borrow €290bn next year, equivalent to a non-trivial 27% of the country's GDP.
But there are reasons to believe that, when it comes to it, Spain's borrowing requirements may be even greater.
First, Moody's fears that Spanish regional government is not engaging in the kind of belt-tightening that may be necessary.
Second, there is a pretty good chance that Spain's banks will have to raise a further €75bn or so of capital, just to bring their core equity up to new international norms, such that they will stand a better chance of raising money in wholesale markets.
On the assumption that loss-absorbing equity capital will have to come from the Spanish state - which is not an alarmist assumption - Spain's overall financing needs for next year would rise to €365bn, or 34% of GDP.
And that makes no allowance either for any possible failure of central and regional governments to hit their budgets or for a possible rise in bank losses.
To put it another way, 2011 will be the year when the financial credibility of Spain - and by extension the eurozone as a whole - is likely to receive its severest test.
You can keep up with the latest from business editor Robert Peston by visiting his blog on the BBC News website.