from BBB- to BB+, with a negative outlook
- Says large fiscal imbalances, high debts means rating no longer consistent with investment grade
- Sees GDP down 3%in 2012, recession makes deficit reduction much more challenging
- State owned enterprises “key source” of fiscal risk.
- Could face further downgrades if growth/economy weakens
- Recapitalization of portuguese banks needed
- Liquidity risk may rise after EU/IMF deal
EUR/USD around 1.3370 and taking little notice so far to the announcement.