Oct. 5 (Bloomberg) -- Spain may have its Aa2 credit rating lowered two steps by Moody’s Investors Service after the firm downgraded Italy and said European nations ranked below the top Aaa level face possible cuts, according to RBC Capital Markets.

“Two-thirds of Moody’s rationale for downgrading Italy can be applied to Spain as well,” Norbert Aul, a European interest- rate strategist, said in a phone interview. With Spain under review for a possible downgrade, that could imply a cut of “two notches,” he said.

Two-year Spanish notes fell, pushing the yield up two basis points to 3.50 percent at 10:29 a.m. in London.

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net