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REFILE-China's Dagong cuts Portugal's credit rating
March 9, 2011 / 11:20 AM / 7 years ago

REFILE-China's Dagong cuts Portugal's credit rating

(Refiles to fix typo in first para)

BEIJING, March 9 (Reuters) - A Chinese ratings agency cut its sovereign credit rating for Portugal by one notch to BBB-plus on Wednesday, saying that sluggish economic growth and an uncertain outlook for fiscal reforms had clouded its outlook.

Dagong Global Credit Rating, China’s biggest home-grown ratings agency, said in a statement that the European sovereign debt crisis could take a turn for the worse in 2011 and warned that Portugal’s economy might shrink this year.

Its rating for Portugal is now lower than those of high-profile international agencies such as Standard and Poor’s and Fitch.

Late last year, a Portuguese newspaper reported that China was ready to buy 4-5 billion euros of Portuguese sovereign debt to help the country ward off pressures in bond markets. [ID:nLDE6BL0TY]

Dagong is an independent ratings agency and does not necessarily represent the Chinese government’s view of credit risk.

“It will be more difficult than expected for Portugal to make structural reforms and to improve its current account deficits,” Dagong said in a statement.

“The country will also see bigger pressure on liquidity and asset quality in its banking system,” it said.

Dagong, which has been rating Chinese corporate bonds since 1994, created a splash by assigning the United States a double-A grade last year, below the AA-plus given to China. (Reporting by Aileen Wang and Simon Rabinovitch; Editing by Toby Chopra)

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