30 MAR 2011
By Leigh Phillips
EUOBSERVER / BRUSSELS - Both Greece and Portugal saw their credit rating slashed by ratings agency Standard & Poor's on Tuesday (29 March).
The firm downgraded Greece by two notches to 'BB-' and Portugal by one, to 'BBB-'.
The cut places Greece's credit rating below that of Egypt, currently involved in the uncertainty of its ongoing revolutionary process.
It is also the second downgrade for Portugal by S&P in a week.
S&P said that the cuts were required as a result of fresh concerns that investors could be hit by some form of restructuring under the European Union's new permanent bail-out fund, due to kick in from 2013.
Yields on Greek 10-year bonds climbed sharply to 12.568 percent, up from 12.499 percent, while Portugal saw its yield increase from 7.818 percent to 7.881 percent.
Greek Prime Minister George Papandreou reacted angrily to the move.
"We have seen the ratings agencies go from the bubble of euphoria to the panic of risk," he said after a gathering of MEPs from the Socialists and Democrats group in the European Parliament who were meeting in the Greek capital.
"Only two years ago they were rating AAA all the toxic bonds that created the crisis," he continued, reports local conservative daily Kathimerini.
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