The same day that Portugal Prime Minister Jose Socrates resigned his position, Fitch Ratings on Thursday cut the nation’s credit rating by two notches, saying that the country’s financing is at risk. That was followed on Friday by a two-notch ratings cut from Standard & Poor’s, which threatened another cut as early as next week.
Amid all the turmoil, Eurogroup President Jean-Claude Junker said that he does not expect Lisbon to seek a bailout from the European Union’s (EU)rescue fund any time soon.
Fitch took action in the wake of the failure of parliament to pass new austerity measures and the subsequent resignation of Socrates, Reuters reported. The credit rating agency warned that additional downgrades may follow over the next three to six months, particularly if a “timely and credible” financial rescue package from the EU and the International Monetary Fund (IMF) does not materialize.
Fitch analyst Douglas Renwick said in a statement: "Given the lack of improvement in financing conditions, Fitch no longer assumes Portugal can maintain affordable market access this year under its baseline scenario."