NEW YORK (CNNMoney) -- Moody's Investor Service downgraded Spain on Thursday over concerns about its sluggish economy and the central government's questionable ability to control finances throughout the country.
Moody's downgraded the country's government bond ratings by one notch, to Aa2 from Aa1, with a negative outlook.
The rating agency expressed doubts over the Spanish government's ability to improve its finances, "given the limits of central government control over the regional governments' finances as well as the background of only moderate economic growth."
Moody's also attributed its downgrade to the high cost that the Spanish government faces in restructuring its banking system, "leading to a further increase in the public debt ratio."
The agency said that the Spanish government has underestimated the cost of restructuring its banking system, implying that the country may have to borrow more. 
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