Portugal cut to BB by S&P on second bailout fears
Ratings agency Standard & Poor's has cut Portugal's sovereign debt rating to BB with negative implications. From their release:
On Sept. 18, 2013, Standard & Poor's Ratings Services placed its 'BB' long-term foreign and local currency sovereign credit ratings on Portugal on CreditWatch with negative implications. At the same time, we affirmed our short-term sovereign credit ratings on Portugal at 'B'.
The CreditWatch placement reflects our view that there are rising risks to= Portugal's ambitious fiscal consolidation objectives and an increased likelihood of noncompliance with the current EU/IMF program. Risks include further challenges to fiscal and reform measures by Portugal's Constitutional Court, weaker-than-expected economic performance, and a resurgence of political tension leading to delays in 2014 budget or program reviews.
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Accordingly, we see an increasing risk that Portugal will not regain full capital market access early next year and that the Portuguese government will require a second official support program after the current program expires in June 2014. Portugal's creditworthiness appears to us, therefore, to increasingly depend on the support and flexibility of its official creditors.