Spanish dilemma gets more acute

MADRID -- The dilemma facing the Spanish government has got more acute following a downgrade of the cash-strapped country's credit rating.

Late Wednesday, Standard & Poor's cut its rating on Spain's debt by two notches to BBB-, leaving the country on the cusp of junk status. That's important because it potentially makes it more expensive for the Spanish government to service its debts.

The agency argued that the government's "hesitation" in requesting help was "potentially raising the risks to Spain's rating."

Though S&P's warning may nudge the Spanish government to make a bailout request sooner than later, rival agency Moody's has indicated it may cut its rating on Spain in the event of a bailout request.

The yield on the country's 10-year bond spiked higher Thursday, an indication of mounting investor unease.