Moody’s downgrades Portuguese Government debt

| April 5, 2011 | 0 Comments
Moody's downgrades Portuguese Government debt

Moody’s Investors Service has today downgraded Portugal’s debt rating, for the second time in less than a month, by one notch to Baa1 from A3.

Moody’s also warned that a further downgrade is possible as a bailout becomes increasingly likely for the debt-laden country.

It said the downgrade was “driven primarily by increased political, budgetary and economic uncertainty”.

Last week, the Portuguese Government announced it had missed its budget deficit target for 2010.

It is believed that Portugal will be the next euro zone nation to seek a bailout.

The country’s borrowing costs have risen in recent months – mimicking what happened in Greece and Ireland – just before they were forced to seek emergency aid.

Yesterday, yields on Portuguese 10-year bonds climbed to record highs of 8.54%.

There have been fears over recent months that the debt crisis in the euro zone could spread to weaker economies, such as Portugal, Spain, Italy and Belgium.

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