Wednesday, December 1, 2010

S&P Warns of Possible Portugal Downgrade

File under: Nothing is confirmed until officially denied

When asked if his government was being pressed by European Union institutions to ask for a financial rescue, Portugal's prime minister Jose Socrates, said,  “It is not true. There is no pressure. We don’t need outside help”.

His comments came shortly after S&P warned that it could downgrade Portugal’s long-and short-term sovereign debt ratings because of increased risk from the possibility of a bail-out.

S&P said the large quantity of Portuguese debt held by non-residents (54 per cent) increased the government’s vulnerability to rising interest rates, increasing external financing needs and raising “the likelihood that Portugal will seek external assistance from the EU”.

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