Moody’s downgrades Portugal’s debt to junk status

| July 6, 2011 | 0 Comments

Credit ratings agency Moody’s has downgraded Portugal’s debt to junk status – becoming the first agency to do so.

It warned of increasing risk that the country may need a fresh bailout before it was ready to borrow money from markets again and cut the country’s rating by four notches to Ba2 from Baa1.

Moody’s expressed concern that Portugal might not be able to meet the deficit reduction programme as part of the condition of its first bailout of €78 billion from the EU and the International Monetary Fund (IMF).

It said: “There was a growing risk that Portugal will require a second round of official financing before it can return to the private market, and the increasing possibility that private sector creditor participation will be required as a pre-condition.”

Standard & Poor’s and Fitch Ratings both have Portugal at BBB-minus.

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