Portugal downgraded again, this time by S&P citing failure to pass austerity measures and resignation of Socrates

Yesterday Moody's did it, you knew the others wouldn't be that far behind.  S&P downgraded Portugal to BBB from A-. The BBB ratings remain credit watch negative

The reasons cited are below.  Via S&P:
The rating action follows the government's loss of a key vote on its latest austerity package on March 23, 2011, and the subsequent resignation of Prime Minister Jose Socrates. In our view, the resulting increased political uncertainty could hurt market confidence and heighten Portugal's refinancing risk.

Prime Minister Jose Socrates resigned after the parliament rejected the Portuguese minority government's latest austerity package. The government presented these measures as part of Stability and Growth Pact 2011-2014 on March 11, 2011, but failed to gain support from the main opposition party, and the package was rejected in a crucial vote on March 23.  Early general elections are expected in the next few months.

"We expect that a successor government would have no choice but to adopt some version of these reform proposals, given investors' apparently reduced appetite for Portuguese government debt, though perhaps on a delayed basis,"

Standard & Poor's credit analyst Eileen Zhang said. "Rising public savings should also, in our view, contribute to the reduction in Portugal's large external imbalances, as we believe the Portuguese private sector's export performance will likely be insufficient to quickly narrow Portugal's current account deficit, which has averaged 9.7% of GDP since Portugal joined the eurozone in 1999."

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