Standard & Poor’s late on Thursday cut Spain’s sovereign credit rating by two notches due to “a challenging fiscal outlook” for the nation.

The ratings agency downgraded the country from A to BBB+.

The drop reflects the agency’s views on “the mounting risks to Spain’s net general government debt as a share of GDP in light of the contracting economy, in particular due to the deterioration in the budget deficit trajectory for 2011-2015,” S&P said.

S&P cited concerns about the implementation of Spain’s €27bn austerity programme and the likeliness of its government having to provide “further fiscal support” to bail out the country’s troubled banking sector.