Moody's May Downgrade Portuguese Debt

Moody's MCO said it might downgrade Portuguese debt by one or two notches, just days after it said it might downgrade Spanish debt. “In Moody's opinion, Portugal's solvency is not in question,” said Anthony Thomas, Moody's lead analyst for Portugal. “But the likely deterioration in debt affordability over the medium term and ongoing concerns about the economy's ability to withstand fiscal consolidation and private sector deleveraging means its outlook may no longer be consistent with an A1 rating.” The agency has Portuga's debt currently rated at A1, but could take further action if it feels it is warranted. “Portugal really seems to be struggling to rein in the deficit at the moment,” said Ben May, a Capital Economics economist . “If anything, the Portuguese economy performed a bit better than people expected this time last year.”