New York Times
March 29, 2011
Standard & Poor’s said Tuesday that it had cut its sovereign credit ratings for Portugal and Greece, piling further pressure on the countries as they both seek to come to grips with a heavy debt load and weak economies.
S&P cut Portugal’s rating to BBB- from BBB, with a negative outlook — its second downgrade in less than a week. BBB- is the lowest investment grade rating at the agency, or just one notch above junk.
The Portuguese government collapsed last week after it was unable to push through Parliament further measures to plug its deficit and fend off the need for outside aid. The country now faces weeks of political uncertainty before general elections.
S&P said the country would probably need an international bailout. Lisbon has about €9 billion, or $13 billion, of bond redemptions coming due in April and June. Analysts suggest that Portugal’s current cash position is sufficient enough to cover the April redemption, but not the one in June.
The Greek rating, already junk, was cut by S&P to BB- from BB+ amid concerns the country may be required to restructure its debt.