By Dick Streuly 

Standard & Poor's Ratings Services cut its ratings on Catalonia, saying it expects increasing political tension between the wealthy region and Spain's central government following regional elections in September.

The ratings firm, which lowered its long-term rating by one notch to double-B minus, added that the outlook is negative given the "risk that Catalonia's smooth coordination with the central government to service the region's debt might be compromised."

Still, S&P, noting Catalonia's weak budgetary performance and high debt load, said it expects Madrid will continue to provide financial aid to Catalonia and keep servicing Catalonia's debt.

The downgrade comes after secessionist candidates won a majority of seats, and just under 48% of the popular vote, during the Sept. 27 parliamentary elections that they cast as a referendum on independence.

S&P said it doesn't expect a secession of Catalonia, adding that despite a pro-independence majority of seats in the Catalan parliament, it anticipates the region will remain part of Spain over its forecast horizon to 2017.

"The lack of a majority of votes in the Sept. 27 election, in our view, weakens the claim of the pro-secession parties to have won a mandate for independence," it said in a news release late Friday.

Catalonia, which produces one-quarter of Spain's exports, is vital to the country's economy. But many Catalans complain the central government drains the region of tax revenue without respecting its distinctive culture. After Spain's economy plunged into recession in 2008, the dispute swelled into a full-fledged campaign for independence.

The national government in Madrid has called the independence push illegal and has vowed to block it.

(END) Dow Jones Newswires

October 10, 2015 09:44 ET (13:44 GMT)

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