MW: S&P cuts Portugal rating to BBB-, Greece to BB-
By William L. Watts
LONDON (MarketWatch) -- Standard & Poor's Ratings Services on Tuesday cut Portugal's credit rating to BBB- from BBB, leaving it just one notch above junk status. The rating was removed from CreditWatch with negative implications, but the outlook for the rating is negative, S&P said. The agency said the cut followed the concluding statement of last week's European Union summit, which confirmed expectations that sovereign-debt restructuring may be a potential prerequisite for borrowing from the European Stability Mechanism, which will replace the EU's existing rescue fund in mid-2013. The statement also confirmed that senior unsecured government debt will be subordinated to ESM loans, S&P said. Greece's rating was cut to BB- from BB+ and remains on CreditWatch with negative implications, the agency said, also citing ESM conditions.
