March 29, 2011
Rating agency Standard & Poor's on Tuesday delivered a damning verdict of the euro zone's new plans for resolving sovereign debt crises, downgrading two of the euro zone's most troubled member states.
Citing fears that the two may have to restructure their debt and force losses on bond holders after 2013, S&P pushed its rating of Greek sovereign debt down further into junk territory, cutting it by two notches to double-B-minus from double-B-plus.
It also cut Portugal's senior debt rating by one notch to triple-B-minus from triple B. It had only last week downgraded Portugal by two notches, and the country is now on the verge of losing its investment-grade status for the first time. The outlook for both countries' ratings remains negative, S&P said.
S&P said it is "highly likely" that Greece will have to access official assistance after 2013, when the current European Financial Stabilization Facility is to be replaced permanently by the "European Stabilization Mechanism".
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