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Contagion alert.According to Moody’s, it’s the situation in Greece that’s caused the ratings agency to cut Portugal to junk
FT Alphaville flagged the key part:
Although Portugal’s Ba2 rating indicates a much lower risk of
restructuring than Greece’s Caa1 rating, the EU’s evolving approach to providing official support is an important factor for Portugal because it implies a rising risk that private sector participation could become a precondition for additional rounds of official lending to Portugal in the future as well. This development is significant not only because it increases the economic risks facing current investors, but also because it may discourage new private sector lending going forward and reduce the likelihood that Portugal will soon be able to regain market access on sustainable terms.
The agency also cited deficit-reduction failures, which should surprise nobody.