Portugal and Ireland should benefit from the latest euro zone debt restructuring package, but that will not translate into any immediate rating upgrades for those countries, Standard & Poor's said today.
The package, which established the terms of a second bail-out for Greece last week, included measures to ease the terms of emergency loans also given to Portugal and Ireland.
It extended maturities on those loans to 15 years from seven and a half years while cutting interest rates to around 3.5% from 4.5-5.8%.
'We think these maturity extensions and interest rate reductions should be beneficial for the debt sustainability of both Ireland and Portugal,' S&P said in a statement.
However, the agency did not anticipate any positive impact on the ratings of those countries, given the continuous challenges to 'narrow their sizable fiscal deficits, and to restore sustainable growth performance.'
S&P's comments followed its decision to downgrade Greece's credit rating to CC from CCC to reflect its view that the restructuring of Greek debt agreed by euro zone leaders puts the country into a 'selective default'.
S&P also said the EU debt restructuring is unlikely to have a significant effect on banks, insurers and companies. 'We have already taken rating actions on these issuers where necessary, as a reflection of the direct and indirect exposure to the euro zone countries whose credit-worthiness has been declining,' it said.
