Portugal’s debt is downgraded to junk status by Moody’s

July 6, 2011 05:21

The agency said there was a growing risk the country would need a second bail-out before it was ready to borrow money from financial markets again. – BBC News

BBC News


Moody’s was concerned that if there was a second bail-out, private lenders might have to contribute.

Portugal’s government said Moody’s had not taken into account the strong backing for austerity measures.

It said that the programme of economic measures announced last week was “the only way to reverse the course and restore confidence” in Portugal.

Discussions are under way about the possibility of banks that have lent money to Greece waiting longer to be repaid.

Moody’s said that prospect would scare private investors and make it even harder for Portugal to borrow money commercially again.

It said the talk of a private bail-out was “significant not only because it increases the economic risks facing current investors but also because it may discourage new private sector lending going forward”.

Portugal, Greece and the Irish Republic were all given bail-out loans to give them time to repair their economies so they could borrow money normally again.

But Greece has already had to start negotiating a second bail-out.


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