Portugal hit by rating downgrade

INTERNATIONAL ratings agency Moody’s has downgraded Portugal’s sovereign debt rating and assigned it a negative outlook.

Its rating of Portugal’s long-term government bonds is now A3, down from A1, following a review initiated last year.

The downgrade was driven by subdued growth prospects in the country while it restructures its economy.

Moody’s said Portugal’s continued reliance on external financing hindered its position, whilst the possibility of government intervention to save its banks would also have an impact.

However, the credit rating agency also noted Portugal’s progress so far, particularly in its labour market reform and efforts towards fiscal consolidation.