Moody's cuts Portugal rating

City A.M. Reporter
Credit rating agency Moody's cut Portugal's sovereign debt by one notch, saying it believed an incoming government would need to seek financing support from the European Union as a matter of urgency.

The cut in Portugal's long-term rating to Baa1 from A3 still leaves Moody's evaluation of its debt two notches higher than fellow agency Standard and Poor's but a notch below that of Fitch Ratings.

Moody's said the debt was still under negative review, with further downgrades dependent on Lisbon's ability to secure medium-term funding.

"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," Moody's said in a statement.

"Moody's believes the new government will likely approach the facility as a matter of urgency."