Standard & Poor’s Ratings Services on Tuesday downgraded Greek ratings into junk territory on concerns about the country’s ability to implement the reforms needed to address its ballooning budget deficit.
The ratings agency cut Greece’s long-term sovereign credit rating a full three notches from BBB+ to double B-plus with a negative outlook, the first level of junk status.
“The downgrade results from our updated assessment of the political, economic, and budgetary challenges that the Greek government faces in its efforts to put the public debt burden onto a sustained downward trajectory,” S&P said in a statement.
Earlier Tuesday, S&P lowered also Portugal’s long-term local and foreign currency sovereign issuer credit ratings to A- from A+.
The action “reflects our view of the amplified fiscal risks Portugal faces,” said the agency.
Reuters: “Under our revised base case economic growth scenario, we expect the Portuguese government could struggle to stabilize its relatively high debt ratio over the outlook horizon until 2013.”
S&P’s downgrades on both Greece and Portugal pushed down the euro to $1.3269. The eurozone’s currency tumbled 1% against the greenback.