S&P revises Portugal sovereign outlook down to negative

NEW YORK (Reuters) - Ratings agency Standard & Poor's on Friday revised Portugal's sovereign credit outlook downward to negative from stable on worries political instability there may derail the country's fragile economy.

"In our view, this week's ministerial resignations complicate Portugal's already-challenging policymaking environment and suggest even less room for manoeuvre than when we changed the rating outlook to stable in March 2013," S&P said in a statement.

"The outlook revision reflects our opinion that we could lower the sovereign ratings on Portugal if growing political uncertainty slows its structural fiscal adjustment process and undermines support from official lenders, including the" European Union and International Monetary Fund, it added.

S&P also affirmed Portugal's BB long-term sovereign credit rating.

Portuguese Prime Minister Pedro Passos Coelho has said he is confident the government will survive the resignations of his finance and foreign ministers, but the crisis has raised questions about Lisbon's commitment to further spending cuts and its ability to exit a 78 billion euro (67.15 billion pounds) bailout next year.

Even before the crisis, the IMF warned that Portugal's debt position, expected to peak close to 124 percent of annual economic output in 2014, was "very fragile.

Moody's Investors Service rates Portugal Ba3 with a negative outlook. Fitch rates the country BB-plus, also with a negative outlook.

(Reporting by Luciana Lopez and Pam Niimi; editing by G Crosse)

Source: http://news.yahoo.com/p-revises-portugal-sovereign-outlook-down-negative-170706801.html

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