Portugal's Rating Slashed

Markets Reuters

Fitch Ratings on Thursday downgraded Portugal's long-term and local currency ratings to A-plus from double-A-minus, reflecting an even slower reduction in its current account deficit and a much more difficult financing environment for banking.

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Fitch said Portugal's budget target for 2011 is extremely challenging and expects recession next year.

Fitch's action comes two days after Moody's Investor Service warned it may downgrade Portugal's A1 rating by one or two notches after a review that will take up to three months, citing weak growth prospects and high borrowing costs.

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