The credit rating agency announced the decision yesterday citing "the high fiscal cost of restructuring and recapitalizing the Spanish banking sector, and the likelihood that Spain will remain in recession through 2013" as the major factors precipitating the downgrade.
Fitch said mistakes at a European level that had allowed the debt crisis to escalate were in part to blame for its decision to cut Spain's credit rating by three notches to just above junk bond status.
The move – which follows the pattern that led to Greece, Ireland and Portugal needing help from Europe and the International Monetary Fund – makes it harder and more expensive for Spain to borrow money on the world's financial markets.
There has been better news though - Honduras have had their long-term foreign and local-currency sovereign credit ratings raised by Standard and Poors, from B to B+ and given a stable outlook.
Elsewhere, Moody's downgraded its rating for Cyprus to Ba1 - junk status - and gave it a negative outlook back in March. The credit agency also took its rating for Greece down from Ca to C. The interactive below by Thiagu on Charts Bin shows how each country is rated. Click on the drop down menu to switch between credit rating agencies.
The recent rating adjustments from Moody's echo the mass downgrade of nine eurozone countries by Standard & Poor's which saw France stripped of its coveted AAA credit last month. S&P also cut Austria's triple-A rating, and relegated Portugal and Cyprus to junk status. The agency downgraded the ratings of Italy and Spain by two notches and Malta, Slovakia and Slovenia were all cut by one notch.
Earlier last year, Moody's re-assessed the credit ratings of several countries. Ireland had its credit rating slashed last year, down two notches to Baa3 - leaving it at just above junk status, with the verdict being delivered as the euro dropped against the dollar.
So, who are the ratings agencies? The big three agencies are Fitch, Moody's and Standard & Poors. What they do is assess how likely a borrower is to be able to repay its debts and help those trading debt contracts in the secondary market.
That means for those trading debt contracts such as Treasury gilts after they have been issued, ratings agencies help assess a fair price to charge. Ratings agencies have been criticised for having too much clout in jittery markets during the financial crisis. They were widely attacked for failing to warn of the risks posed by certain securities, in particular mortgage-backed securities.
Losing your rating or being downgraded can have a fatal effect on your country's ability to borrow money on the markets.
Thanks to the three big agencies, we can bring you the ratings of countries around the world as of today. Because each agency's approach is slightly different, we have colour-coded them in three broad categories too. All the ratings have been updated today. Ratings for previous updates this year and from 2011 are in the spreadsheet, so you can see how ratings have changed over time.