Portugal saves €1.2B in interest from ratings agency rate rise
Standard’s & Poors decision to improve Portugal’s rating reflects the structural reforms to the economy that have been made by the government since 2017.
Finance Minister Mário Centeno, reacting to the decision by the US ratings agency to upgrade Portugal’s investment potential and creditworthiness, said the move “reflects the recognition of the structural reforms in the economy which will have a direct impact on the financing costs of families, companies and the State.”
The ratings are published by the main international ratings agencies Fitch (BBB), DBRS (BBB), Moody’s (Baa3) and Standard & Poors (BBB) which help investors determine a country or institutions abilities to pay off its debts.
“The (upgrade) decision contributes to enhance the confidence of investors and Portugal’s credibility overseas, with a direct impact on the financing costs of families, companies and the state,” said the Minister of Finances who is also Chairman of ECOFIN – the EU group of finance ministers.
S&P upgraded the rating for Portugal from BBB- to BBB – two levels above ‘junk’ investment status, awarding it a ‘stable outlook’.
Mário Centeno said that in September 2017 S&P was the first of the main ratings agencies to take Portugal from ‘junk’ or non-speculative status.
“It was a positive but at the same time a very clear sign that the Portuguese Republic’s financing was getting back to normal” adding that since that time “Portugal had issued €23.4Bn in sovereign bonds at different maturity dates.”
“And thanks to this recognition and the road we have taken in the financial markets, we are paying €1.2Bn less in interest on these issues,” he said.
Centeno said that these savings the State has made on its financing had only been achieved as a result of the economic policies that it had followed over these years and followed by companies and families.
Mário Centeno stressed that the hard work needed to continue so that new generations would not be saddled with the high debts amassed by the previous one and emphasised the importance of focusing on bringing down the public debt.