The European Commission has severely criticised Moody’s credit agency for slashing Portugal’s debt rating.
Brussels accused Moody’s of “questionable conduct” after hacking four grades off Portugal’s rating, consigning the country’s credit status to junk.
It is another obstacle for those who are trying to manage the country’s swollen debt-pile.
The President of the European Commission Jose Manuel Barroso said: “Yesterday’s decisions by one rating agency does not clarify the situation. On the contrary, they add another speculative element to the situation.”
The downgrade puts Portugal’s credit-worthiness below investment grade, following Greece to a similar status.
Portugal already has to pay three times more than Germany to attract investors to buy its government bonds.
News that confidence in its ability to repay has tumbled is likely to make borrowing even more expensive at a time when it is already reliant on an EU-IMF rescue package.