Portugal debt given junk status amid 'formidable challenges'

Credit rating agency Moody's on Tuesday (5 July) downgraded Portugal's debt rating to junk status, a move hinting at market expectations that a second bailout may be needed as in Greece.

The euro slid from 1.4460 to 1.4420 against the US dollar after Moody's downgrade by four notches to Ba2 status, meaning that pension funds are not allowed to hold Portuguese bonds any more.

Citing concerns that Portugal will not be able to meet the "formidable challenges" in cutting its spending,...