Moody's Investor Services announced Tuesday that it has downgraded the long-term government bond rating for Portugal from Baa1 to Ba2 and assigned the country a negative outlook.
The short-term debt rating was also downgraded.
Moody's downgraded the country's rating on the increased risk that Portugal will need a second round of financing before it can return to the private market.
Moody's noted in a statement that while Portugal's downgrade 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."
