Standard & Poor's Ratings Services downgraded Portugal's credit ratings by two notches to A-minus while further lowering Greece's government debt to a junk status of double-B-plus.
In a statement, the agency put forth a negative outlook for Portugal saying the nation's public finances remain structurally weak and the government could struggle to stabilize its high debt ratio possibly until 2013.
S&P said Portugal's dependence on external financing in the past adversely affected its economic growth.
It added that the nation should implement fiscal consolidation measures above its current plans to lower its deficit level which reached 9.4 percent of its gross domestic product in 2009.
And the downgrade of Greece's long-term ratings to a non-investment status comes after the nation's call for a joint rescue package worth 45 billion euros or roughly 60 billion US dollars from the European Union and the International Monetary Fund last week.
The nation is facing May 19th deadline to repay 8.5 billion euros to bondholders.
S&P said. although the government has already put forth a considerable amount of fiscal consolidation plans medium-term financing risks related to its high debt burden are still growing.
The ratings agency added that an updated assessment of Greece's economic and fiscal prospects suggests its credit rating is "no longer compatible with an investment-grade rating."
The adjustments have hammered stock markets in the United States and Europe on Tuesday as the FTSE 100 dropped 2.6 percent and the Dow Jones Industrial Average lost 213 points to fall below 11-thousand which was the biggest one-day loss in more than two months.
Eoh Jin-joo, Arirang News.