Moody’s Warns Portugal of Downgrade

[Elmore Furth]

Source: Reuters

LISBON (Reuters) - Moody's Investor Service warned on Tuesday it may downgrade debt-ridden Portugal's A1 rating by one or two notches after a review that will take up to three months, citing weak growth prospects and high borrowing costs.

Portugal has moved into the eye of the storm in Europe's debt crisis, with markets worried it will be next to take a bailout after Ireland and Greece, although Moody's said its solvency was not in question.

The premium investors demand to hold Portuguese 10-year bonds rather than safer German Bunds rose 9 basis points from Monday's settlement levels to 368 bps. Last month, the spread hit a euro lifetime record of over 481 bps, but has narrowed since thanks to bond buying by the European Central Bank.

The ratings agency said it had concerns about Portugal's ability to access capital markets at a sustainable price and cited "uncertainties about Portugal's longer-term economic vitality, which will be exacerbated by the impact of fiscal austerity."



Read more: http://www.nytimes.com/reuters/2010/12/21/business/business-us-portugal-moodys.html?hp

[Skink]

1. this is kind of like the finacial crisis where they gave everybody stellar ratings..

accept here they are advising the hedgefunds when to come in and pillage.