Portugal ’s Debt Downgraded to Junk Status by Moody’s
Following of the wake of S&P’s warning of a default rating for Greece, another ratings agency has weighed in on the cascading European sovereign debt crisis. Moody’s has lowered its classification of Portugal’s sovereign debt to the level of junk. This comes despite a recent €78billion bailout from the IMF and EU, the equivalent of more than $111 billion in U.S. currency.
The latest ratings moves by Moody’s and S&P illustrate the lack of confidence that private investors have in the machinations of European politicians and their friends at the IMF in resolving the growing European debt crisis. If anything, these bailouts piled on top of bailouts, all requiring vast amounts of borrowed money financed by European taxpayers, assure that the Eurozone debt disaster will only further metastasize. It won’t be long before Portugal, like Greece, requires a second bailout, and perhaps Ireland will follow soon. Ultimately, who bails out an increasingly indebted EU?