S&P has downgraded five Portuguese banks and has now threatened to downgrade the country’s sovereign debt again just days after bringing it down two notches.The ratings agency downgraded the Portuguese division of Santander, the country’s largest publicly traded bank, Banco Espirito Santo, and three others, according to Bloomberg.
And now, only three days after the downgrade of the Portuguese sovereign from A- to BBB, S&P may be ready to hit the sovereign again.
“The negative CreditWatch implications on our long-term counterparty credit ratings on the Portuguese banks reflect our negative CreditWatch listing of the sovereign rating, and thus the possibility of a further sovereign downgrade” that may happen “as early as this week,” S&P said in an e-mailed statement.
It appears that S&P was just waiting for the country’s austerity budget to fail before they unleashed this series of downgrades. With yields spiking yet again this morning, a bailout seems more and more certain, but with political instability in Germany after Merkel’s regional election loss, there may be no guarantee a deal gets done soon.