In fact, said the paper, one of the big three credit-rating agencies had ranked them as "just one notch above non-investment grade or 'junk'".

If true, Portugal would be downgraded to non-investment grade by S&P.

Floating-rate loans are often compared to high-yield bonds, because both are non-investment grade.

In December 2011 two of the three major credit rating agencies downgraded Hungarian debt to a non-investment speculative grade, commonly called "junk status".

S&P thus becomes the second credit rating agency to cut Hungary to non-investment grade, after Moody's made a similar move last month.

The bonds have recently been downgraded to non-investment grade, or junk status, by the ratings services.

A downgrade for United would push it into the non-investment grade, or junk-bond category.

That means Portugal is considered non-investment grade by Fitch, making it even more difficult for the struggling country to return to the bond markets.

Kemper has been investing in junk bonds rated B, which is at the higher end of non-investment grades.

Some investors yesterday sold the bonds amid concern the debt will slip to non-investment grade, or junk-bond, status, traders said.