Moody’s downgrades Portugal rating for second time in a month

Wednesday 6 April 2011

MOODY'S Investors Service has downgraded its rating on Portuguese debt for a second time in less than a month and warned that the country's next government would have to seek financial help from its European neighbours "as a matter of urgency", writes Douglas Hamilton.

Custom byline text:

The ratings agency trimmed its rating on Portugal’s long-term bonds to Baa1 from A3, and placed the country on review for another downgrade. The ratings have been cut several times since the Socialist minority government collapsed last month, after failing to pass a new round of cutbacks.

If Moody’s cuts Lisbon’s rating a further three levels to Ba1, then its bonds would be considered junk by that agency. Standard & Poor’s has already cut Portugal’s rating to BBB-, which is just one notch above junk status. Portugal has about €9 billion, or nearly £8bn, of bond redemptions falling due in April and June, and investors doubt it will be able to meet those payments without help from the European Union or the International Monetary Fund. Yields on Portugal’s 10-year government bonds rose to 9.033%, while Lisbon-listed stocks fell. Portuguese officials have conceded that the country cannot sustain paying 7% or more for long. The business daily Jornal de Negocios reported yesterday that Portugal’s biggest banks will stop buying government debt in coming months and are urging the government to seek a short-term loan until a national election is held on June 15. The heads of Banco Espirito Santo, Millennium BCP and Banco BPI met the governor of the Bank of Portugal to pass on their views on Monday, the news-paper said.Nobody at the Bank of Portugal nor at the banks was available to comment.

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis. If you're a relatively new user then your comments will be reviewed before publication and if we know you well then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules, which are available here.

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

Moody’s downgrades Portugal rating for second time in a month

Commenting & Moderation

MOST READ

SPONSORED LINKS

MOST COMMENTED