This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/go/rss/int/news/-/news/business-12901292
The article has changed 2 times. There is an RSS feed of changes available.
Previous version
1
Next version
Version 0 | Version 1 |
---|---|
Portugal and Greece downgraded on debt worries | Portugal and Greece downgraded on debt worries |
(about 2 hours later) | |
Ratings agency Standard & Poor's has downgraded struggling Greece and Portugal on further debt worries. | Ratings agency Standard & Poor's has downgraded struggling Greece and Portugal on further debt worries. |
S&P says investors in their bonds could lose out under the terms of a new eurozone bail-out package. | S&P says investors in their bonds could lose out under the terms of a new eurozone bail-out package. |
The move pushed up the countries' borrowing costs as lenders demanded a higher rate of return for buying government bonds. | The move pushed up the countries' borrowing costs as lenders demanded a higher rate of return for buying government bonds. |
The downgrades left Portugal one notch above junk rating and Greece's creditworthiness below that of Egypt. | The downgrades left Portugal one notch above junk rating and Greece's creditworthiness below that of Egypt. |
S&P cut Portugal by one notch to BBB-, having slashed its rating last week after Lisbon's government fell. | S&P cut Portugal by one notch to BBB-, having slashed its rating last week after Lisbon's government fell. |
Greece was cut by two notches to 'BB-', the latest in a series of downgrades. | Greece was cut by two notches to 'BB-', the latest in a series of downgrades. |
S&P, one of the top three ratings agencies, said the downgrades were in response to concerns that a new eurozone debt rescue system agreed at a European Union summit last week could penalise investors. | S&P, one of the top three ratings agencies, said the downgrades were in response to concerns that a new eurozone debt rescue system agreed at a European Union summit last week could penalise investors. |
"Our view is that this really is a game changer," S&P analyst Frank Gill said, referring to the European Stability Mechanism (ESM) agreement. | "Our view is that this really is a game changer," S&P analyst Frank Gill said, referring to the European Stability Mechanism (ESM) agreement. |
"We do think it is clearly negative for holders of commercial debt, that is our view, that it will weigh on countries' capacity to serve their commercial debt," he said. | "We do think it is clearly negative for holders of commercial debt, that is our view, that it will weigh on countries' capacity to serve their commercial debt," he said. |
The ESM means that investors could see their investments restructured, either in terms of the amount they get repaid or the length of time they have to wait for repayment. | The ESM means that investors could see their investments restructured, either in terms of the amount they get repaid or the length of time they have to wait for repayment. |
Portugal has not yet called on money from the European bail-out fund, but many analysts believe it is just a matter of time as the country's economic situation worsens. | Portugal has not yet called on money from the European bail-out fund, but many analysts believe it is just a matter of time as the country's economic situation worsens. |
The Bank of Portugal warned on Tuesday that the country might need substantial new austerity measures to ensure it can meet budget reduction targets. | The Bank of Portugal warned on Tuesday that the country might need substantial new austerity measures to ensure it can meet budget reduction targets. |
Higher costs | Higher costs |
For Greece, whose near default in May threatened to sink the whole eurozone project, S&P said the government was struggling badly to meet the targets set under its 110bn euro (£97bn;$150bn) EU-IMF bail-out deal. | For Greece, whose near default in May threatened to sink the whole eurozone project, S&P said the government was struggling badly to meet the targets set under its 110bn euro (£97bn;$150bn) EU-IMF bail-out deal. |
The S&P downgrades had an immediate impact in the money markets. | The S&P downgrades had an immediate impact in the money markets. |
The yield, or return rate, for investors in Greek benchmark 10-year bonds rose to 12.568% from 12.499%. | The yield, or return rate, for investors in Greek benchmark 10-year bonds rose to 12.568% from 12.499%. |
Portuguese rates rose to 7.881% from 7.818%, having hit a record high of 7.97% shortly after S&P's announcement. | Portuguese rates rose to 7.881% from 7.818%, having hit a record high of 7.97% shortly after S&P's announcement. |
Yields of 7% or above are considered unsustainable in the long run, meaning both countries could face problems raising money from lenders. | Yields of 7% or above are considered unsustainable in the long run, meaning both countries could face problems raising money from lenders. |
Previous version
1
Next version