6 Jul 2011

Portugal's credit rating cut

11:40 am on 6 July 2011

Moody's Investors Service has cut Portugal's credit rating by four notches to Ba2, two notches into junk territory.

The credit rating agency says there's a great risk that Portugal will need a second round of official financing before it can return to capital markets.

The BBC reports Portugal was supposed to cut its deficit to 3% of its gross domestic product by 2013, from last year's 9.1%.

Moody's previously cut Portugal's rating in April, predicting the original bail-out of 78 billion euros ($US112 billion) from the EU and the IMF.