Portugal and Greece won't lose access to European Central Bank (ECB) liquidity, said the ECB in separate announcements.

These statements indicate that the bank will continue to accept the debt from the troubled sovereigns as collateral for loans.

The ECB yesterday published an announcement that said it would suspend the application of the minimum credit rating threshold in the collateral eligibility requirements for the purposes of the Eurosystem’s credit operations in the case of marketable debt instruments issued or guaranteed by the Portuguese government. This suspension will be maintained until further notice.

The Portuguese government has approved an economic and financial adjustment program, which has been negotiated with the European Commission, together with the ECB, and the International Monetary Fund.

The Governing Council has assessed the program and considers it to be appropriate. The approval was based on a positive assessment and the strong commitment of the Portuguese government to fully implement the program from a risk management perspective.

The suspension applies to all outstanding and new marketable debt instruments issued or guaranteed by the Portuguese government. The ECB also made a similar announcement regarding Greek bonds.

According to market reports, the ECB will base ratings eligibility on  the best rating available for the sovereigns from the rating agencies – Standard & Poor’s, Moody’s and Fitch Ratings.  All three of the rating agencies would have to take action to close access to ECB funds.

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