Fitch Ratings downgraded 234 tranches of Spanish asset-backed securitizations after cutting the nation to within two steps of junk.

Among the deals Fitch downgraded were 150 residential mortgage-backed securities and three commercial MBS, the New York-based ratings company said today.

Fitch downgraded Spain by three levels to BBB yesterday, saying the cost to the government of restructuring the country’s banking system may be as high as 100 billion euros ($125 billion), compared with a previous estimate of about 30 billion euros. Spain’s economy is set to remain in recession through 2013, the ratings company said, having earlier forecast a recovery for next year.

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To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net