Portugal's Credit Rating Reduced to Junk Status

Fitch Ratings has dropped Portugal's credit rating to junk status based on the growing debt and weaker outlook for the economy. The long-term rating was lowered one level to BB+ from BBB- with a negative outlook, Fitch said today in an e-mailed statement. Portuguese 10-year bonds fell after the announcement, with the yield at 12.14 percent at 1:09 p.m. in Lisbon.

“The country's large fiscal imbalances, high indebtedness across all sectors, and adverse macroeconomic outlook mean the sovereign's credit profile is no longer consistent with an investment-grade rating,” Fitch said. The ratings of utility EDP-Energias de Portugal SA (EDP) and telecommunications company Portugal Telecom SGPS SA (PTC) are unaffected, Fitch said.

Source: Bloomberg