The credit ratings for Greece and Portugal have been downgraded again by a leading ratings agency in the latest sign of disapproval of European plans for resolving the region’s debt crisis, according to The Wall Street Journal. On Wednesday, Standard & Poor’s lowered its rating for Greek sovereign debt by two notches to BB-minus, while slashing the senior debt rating for Portugal by one notch to BBB-minus. The move pushed the Greek rating further into junk territory, and leaves Portugal on the verge of acquiring junk status for the first time. The outlook for both countries remains negative.
The agency cited concerns that both countries may be forced to restructure their debt and pass on losses to bondholders after 2013, when the European Stabilization Mechanism permanently replaces the temporary European Financial Stabilization Facility. S&P said a Greek restructuring was “highly likely” when the EFSF expires, and forecast that Portugal would be forced to accept international aid soon. Greek Prime Minister George Papandreou urged European leaders to strengthen the support system, asserting, “S&P is downgrading Greece not because of what Greece is doing,” and claiming, “What they are saying is that the decisions of the European Union are not enough.”