European debt crisis, which has been haunting the region since 2011 and has been off and on from the limelight could again be back into the light in October, depending on the rating agency DBRS Ltd. DBRS is the only one among the four rating agencies, recognized by the European Central Bank (ECB) that has credited Portugal with a BBB (low) rating. This is the lowest investment grade ratings. The other three, Fitch, Standard & Poor, and Moody’s, all had downgraded Portugal’s debt to below investment grade, back in 2011, at the height of the debt crisis.

This year, the rating agency, Fitch downgraded Portugal’s outlook from ‘Positive’ to ‘Stable’ and DBRS warned on the outlook last week. DBRS issued a statement saying that it is comfortable with Portugal’s rating. That provided some relief but there is still a possibility that the rating could see a downgrade in October review, largely due to high debt levels (highest-combine debt level in the Eurozone) and a fragile banking system.

A downgrade by DBRS would mean that Portuguese bonds would no longer be eligible under the asset purchase program of the European Central Bank (ECB) unless a waiver is imposed and that could bring back the threats of a debt crisis and political gridlocks.

Portugal's benchmark 10-year yield is currently trading at 305 basis points above that of Germany.