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Portugal gets knocked down to junk status
Published: 24 November, 2011, 15:22
Edited: 24 November, 2011, 18:40
A man walks on May, 12, 2011 past piles of paper prepared for recycling at the Renova Factory in Torres Novas. (AFP Photo/ Patricia De Melo Moreira)
Fitch Rating agency downgrades Portugal to junk status due to the country’s high debts.
Portugal's Long term foreign and local currency Issuer Default Ratings (IDR) went down from 'BBB-' to'BB+' .
The agency says the country’s high debt and bad macroeconomic outlook mean their credit profile doesn’t match an investment-grade rating.
The rating carries a negative outlook, which means a further cut is possible.
The tough economic situation around Europe contributed to the pessimistic overview of the country.
Fitch believes the country's GDP will contract by 12 per cent in 2012.
The Portuguese government has so far failed to get a set of austerity measures through the parliament.
A 24-hour general strike is currently underway in the country.
Anna Bodrova, analyst at InvestCafe says, “If the Portuguese government passes through and adopts bailout measures quickly, the rating downgrade will be the only negative outcome of this situation, but right now Portugal follows the Greek scenario.”
Makism Shein, head of analytics, says rating is only a warning, but Portugal is no immune to default,
“Despite Portugal’s better position compared to Greece in terms of budget deficit and debt burden it is still vulnerable to a liquidity shortage and credit liability growth. However, ratings are mainly covering only credit solvency, the ability to meet liabilities. Bond yields can provide more insight. Right now Portugal still can favourably borrow which provides for liquidity. Although the government must approve austerity measures immediately."
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Gerald Celente has warned on 21 Nov 2011, that he reckons they want
people to spend before xmas and then they will pull down the system.
check out http://www.youtube.com/watch?v=J90FOZBXeZY
Thıs is an indicent headlines. How can you treat a country as junk and put a pıcture lıke that rıght next to ıt. So many people in portugal are living in mısery becouse of big empirial powers who forced a lıtle country to enter theır bıg game, now they are fellıng consecuences of an unfıttet system. Its like downgrading greece to junk status, a country wıch ın mıllenias thought so much to the world and now ıs beıng mediaticly raped. Respect the world people, dont point your finger at these countrıes so rudly, dont make artıcals lıke this, or at least explaın your elf better, go to portugal and see what is really happenıng there
Portugal is a small country with little industry, it borrowed money at low interest, built lots of things it couldn't afford and now can't pay its debts. Its like a van driver living like a celeb !
Its not a case of "picking them off" its because when payment is due, they can't pay so they get marked down. How can greece and Portugal pay off their debts, they can't and you can't compare it with America, the most powerfully armed military in the universe ! America has $15 trillion debt, and growing, and very soon they will get marked down. Every bank in Europe has trouble, spending money they didn't have, the money wasn't real, it was Mickey mouse money