Tuesday, July 5, 2011

Portugal’s Debt Rating Cut to Junk by Moody’s

Moody’s Investors Service has cut Portugal's debt rating to junk.

Moody’s cut its rating on Portugal’s long-term government bonds to a non-investment-grade rating of Ba2 from Baa1 and said the outlook was negative.

The ratings agency warned that Portugal might fall short of the financial targets it worked out with the EU and IMF under the terms of its bailout because of the “formidable challenges the country is facing in reducing spending, increasing tax compliance, achieving economic growth and supporting the banking system.”

Further, Moody's noted that Portugal would need another bailout, since it can't access the markets for funds.

So now are the IMF and ECB supposed to bailout Portugal on top of Greece? The breaking point may be near, where the eurozone simply collapses.

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