Analysts consulted by Lusa believe that the financial rating agency will improve Portugal’s rating, after the last assessment, in September last year, maintained the country’s rating at ‘BBB+’, but improved the outlook for ‘ stable’ to ‘positive’.
If the improvement takes place, S&P will align the assessment with the other three main international financial rating agencies, which last year took the country out of ‘B’ levels, placing it back in ‘A’ levels (within the ‘B’ level). A’ scales vary between A-/A/A+ or A1/A2/A3).
Before the intervention of the ‘troika’ in Portugal, in 2011, the four agencies still classified Portuguese sovereign debt at ‘A’ levels, drastically cutting the assessment after the request for financial aid.
The country needed seven years to stop having “junk” ratings, and now, after 13 years, the country’s debt reduction trajectory is the main justification for the agencies to place the country’s risk at the levels ‘A’, allowing lower cost financing by the Republic.
“Portugal has managed to reduce its debt load, while maintaining a trajectory of economic growth, factors that could positively influence a possible rating review” by S&P, predicts the Director of Investments at Banco Carregosa, Filipe Silva.
For the president of the IMF — Financial Markets Information, Filipe Garcia, “the agency should highlight the very good evolution of public accounts, with a significant reduction in the weight of debt/Gross Domestic Product (GDP) and better economic activity compared to the average of the eurozone, leading to an improvement in the fiscal position”.
The analyst highlights that “in addition, the country risk has been decreasing consistently”, exemplifying that, taking “as a reference the ‘spread’ against Germany for the 10-year maturity, Portugal “pays” 65 basis points more than than Germany, the lowest level in more than two years.”
Analysts also rule out any impact on S&P’s assessment of the upcoming legislative elections on March 10.
The next agency to comment on Portugal will be Fitch, on March 22nd.
Fitch currently assesses Portuguese sovereign debt at ‘A-‘, with a stable outlook, DBRS at ‘A’, with a stable outlook; and Moody’s at ‘A3’, with a stable outlook.
The ‘rating’ is an assessment given by financial rating agencies, with a great impact on the financing of countries and companies, as it assesses credit risk.
The rating agencies’ calendars are merely indicative, and they may choose not to comment on the scheduled dates or to proceed with a non-scheduled assessment.
Read Also: Portugal’s rating should return to ‘A’ levels for all agencies
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