Portugal’s banks didn’t lend blindly into a massive property bubble and didn’t get caught in subprime shenanigans. Yet they’re still in big trouble–that’s not a happy message for other European lenders.

Earlier Friday, Moody’s lowered its standalone ratings for six Portuguese banks, including two-notches downgrades for the traditional top three commercial banks, Banco Comercial Portugues, Banco BPI SA and Banco Espirito Santo. In addition, Moody’s said more downgrades may be on the way.

As detailed by Moody’s, the reasons for the downgrade are non-controversial: the banks have significant holdings of sovereign debt, especially Portuguese debt, that is now riskier than ever. And this is amid austerity measures in the country, higher loan delinquency and widespread jitters in capital markets–all of which mean few investors or other banks are willing to lend them money.

http://blogs.wsj.com/source/2011/10/07/a-gloomy-message-from-portug...