Credit rating reduced to junk
Portugal had its credit rating reduced to ‘junk’ level or Ba2 by Moody’s yesterday. Both Standard and poor and Fitch have Portugal on the lowest level of the investment grade, BBB.
The reason for the drop would appear to be that the credit rating agencies are not convinced that Portugal will meet its deficit reduction targets and may need a further bailout from the EU and IMF.
The Portuguese government pointed to the extraordinary tax they put in place last week and suggested that the move was premature.