by Calculated Risk on 3/24/2011 07:45:00 PM

From S&P via Reuters:

Standard & Poor's Ratings Services lowered its long-term sovereign credit rating on the Republic of Portugal today to 'BBB' from 'A-' (the 'A-2' short-term sovereign credit rating is unchanged). The long- and short-term ratings on Portugal remain on CreditWatch with negative implications. We believe that this rating action could have a negative impact on the creditworthiness of the five Portuguese banks, and two related subsidiaries, that we rate ...

No surprise ... a bailout seems imminent.

Also from the WSJ: Portugal's Woes Turn Spotlight on Spain

Portugal's admission that it will probably need a financial bailout raises a question that will shape the outcome of the euro zone's debt crisis: Is Spain next?

The cost of saving Spain, a €1.1 trillion ($1.56 trillion) economy, would dwarf previous bailouts and could test the financial strength of Europe as a whole.

But if Spain can continue to repair investors' trust, as in recent weeks, then Europe stands a chance of containing the debt crisis to three countries ... whose combined economies are half the size of Spain's.

I suppose there are two key questions: 1) Is Spain next? and 2) will Ireland, Greece, or Portugal default (and what would be the impact of a default)?