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Moody’s puts Portugal economy through “fine tooth-comb” from today

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The international ratings agency Moody’s is making a profound study of Portugal’s economic and financial performance from today.

The agency that has placed Portugal on a Baa3 ‘Stable Outlook’ rating will weigh up both macroeconomic and microeconomic factors in its assessment as to how well the economy is performing before deciding to upgrade its ratings status or keep things as they are.
“It is difficult to justify not raising Portugal’s rating taking into account positive developments. Since our last review, interest rates have fallen to a record low”, says Filipe Garcia, economist and president of the FMI – Financial Markets Information who expects to up Portugal’s rating.
By reviewing Portugal’s rating upwards, Moody’s could pave the way for a Baa2 rating — in other words the second grade on the ‘B’ ranking in terms of investment quality.
Competing ratings agencies Standard & Poor’s, Fitch and DBRS already have set Portugal at this higher level. (S&P: BBB Stable/Fitch: BBB Positive/ DBRS: BBB Positive).
At its last review in February, Moody’s decided against changing Portugal’s rating. In October 2018 it decided to pull the country out of ‘junk’ status.
At that time yields on Portuguese 10-year treasury bonds stood at 2%. Since then they have plummeted to around 0.2% and today are at a historic minimum of 0.15%.
“The positive factor is the interest rates, but there are greater market fears of an economic downturn and trade wars”, added Mário Carvalho Fernandes, director of investments at Banco Carregosa who expected that the rating would remain unchanged for the time being.


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