Portugal, striving to avoid becoming the next victim of Europe's debt crisis, was put on standby for a credit rating downgrade on Wednesday even as the government managed to raise some ¤500 million ($654 million) on the bond markets. Moody's Investor Services warned it may downgrade Portugal's Aa2 debt rating in the next three months, a week after its rival Standard and amp; Poor's cut its rating and stoked market concerns that the crisis in Greece was spreading to other financially troubled countries in the eurozone. Greece is getting a ¤110 billion package of bailout loans from the International Monetary Fund and the other 15 countries in the euro in hopes of preventing a eurozone-wide government debt market meltdown. Moody's cited a weakening in Portugal's public finances as well as its long-term growth prospects. “The review for possible downgrade will consider a repositioning of Portugal's ratings to reflect the potentially lasting deterioration in the government's debt metrics,” says Anthony Thomas a senior analyst at Moody's. “In the context of a small and slow-growing economy, such debt metrics may no longer be consistent with a Aa2 rating,” he added. Portugal's rating could fall by one, or at most two, notches and that the review is expected to be concluded within three months. It also said that higher market borrowing costs may make it more difficult for the country to fund its debt commitments for some time to come even though it said the country's debt service remains “very affordable in the near to medium term.” The warning came after the country raised ¤500 million ($654 million) in its bond first issue.
