Portugal downgrade dampens SSA sentiment

The euphoria that entered the market early this week after the recent Greek austerity votes and the release of the July tranche of bail-out funds proved to be short-lived. Moody’s downgraded Portugal by four notches from Baa1 to Ba2 with a negative outlook on Tuesday evening, citing a growing risk that the country will require a second round of official financing before it can return to the capital markets. The agency also doubts that Portugal will be able to reach the ambitious deficit reduction and stabilisation measures set out in the IMF/EU programme.