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April 05, 2011 at 06:19 AM
Despite an auction result that bought time for Portugal as that nation seeks to avoid a bailout and resolve its debt issues independently, Moody’s Investors Service on Tuesday cut Portugal’s sovereign debt rating one more notch to Baa1. The ratings agency said that it thought the country’s incoming government would have to find financing help from the European Union (EU) urgently.
According to Reuters, a report last week published in the International Financing Review opined that Lisbon had bought itself time to resolve the crisis without resorting to a bailout because of a successful bond auction held last week. However, apparently that report carried no weight with Moody’s, which said that the nation’s debt was still under negative review.
In a statement, Moody’s said, "The limited migration of the rating to Baa1 (and not lower) in today's action, reflects Moody's assessment that assistance would be provided by the other members of the euro zone if Portugal needs financing on an expedited basis before it can obtain funds from the European Financial Stability Facility (EFSF). Moody's believes the new government will likely approach the facility as a matter of urgency."
