Moody's may cut Portugal Telecom debt

Moody's Investors Service said it placed on review for possible downgrade the Baa2 issuer and senior long-term debt ratings of Portugal Telecom SGPS, SA and the ratings of its fully-owned subsidiary PT International Finance BV.

The review will focus on Portugal Telecom's operating performance prospects and the extent to which they might be affected by the likely deterioration in domestic consumer spending as a result of new austerity measures and structural reforms to be implemented in Portugal in the short- to medium-term to address the country's budgetary and economic problems, the agency said.

The placement reflects Moody's concern that the deteriorating macro environment in Portugal could impair the company's ability to sustain adjusted financial ratios such as a net debt-to-EBITDA ratio of around 2.5 times, the agency added.

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