Europe's debt crisis got worse Tuesday as a rating agency slashed the credit ratings for the Greek and Portuguese governments.
Standard and Poor's cut Greek long-term government bonds three levels to speculative or "junk" status because of the "political, economic and budgetary challenges" facing Athens. The same agency downgraded Portugal's sovereign debt by two notches.
S & P said it has growing concerns about the ability of the Greek and Portuguese governments to repay debts. The move followed weeks of talks among European nations and the International Monetary Fund about an aid package worth as much as $60 billion for Greece.
The lower rating means lenders will demand higher interest rates, raising borrowing costs at a time when Greece and Portugal are already struggling with financial issues.
The downgrades prompted Greek and Portuguese stocks to fall sharply in Tuesday's trading.