Moody’s removes Portugal “junk” status

The international ratings agency Moody’s has taken Portugal’s sovereign debt out of junk status seven years after it had applied the rating.

On 5 July 2011 Moody’s classified Portugal’s long-term sovereign debt as “speculative investment” (dubbed “junk” status). On Friday 12 October it finally lifted that status conferring Portuguese bonds as a “quality investment with a stable outlook.”

Moody’s is the first international ratings agency to take Portugal’s sovereign debt out of “junk” status by raising its classification to ‘Baa3,’ the lowest level of quality investment.

In the case of Portugal, the ratings agency — known for being more conservative — says it has received sufficient guarantees that the Portuguese government’s current economic and fiscal trajectory will be maintained and therefore decided to improve the country’s financial rating.

“This review has placed Portuguese debt in an investment classification along with the other major international ratings agencies,” says the Portuguese Minister of Finance, Mário Centeno.

“It is the first time that this has happened since July 2011 when Portuguese sovereign debt was classified with a non-investment status,” he adds.

The minister also said that after seven years Portugal was once again fully active in the bonds markets and that the Moody’s review would contribute to “broaden the base of international investors in Portuguese public debt and thereby reduce the costs of servicing that debt which in turn would reduce borrowing costs for families, companies and the Portuguese State.”