Moody’s ups Portugal rating

The ratings agency Moody’s has finally improved Portugal’s rating from the lowest investment grade status after ‘junk’.

Portugal’s rating has now gone from Baa3 to Baa2 with a stable outlook.
Moody’s decision was based on the expectation that Portugal would see improvements in its long-term growth prospects because of Next Generation EU funds and the implementation of structural reforms.
The agency is also confident that Portugal will get a grip on its debt and reduce it in the coming years because of stronger economic growth and greater efficiency in designing its budgetary policies.
Portugal’s ‘stable’ outlook is supported by strong institutions and governance in the country, a relatively diversified economy and levels of wealth that are high in comparison to other countries with a Baa2 rating.
However, Moody’s continues to point out weaknesses such as high private and public debt and a position of weak international investment, as well as persistent weaknesses in the banking sector.
When the US press reported that Portugal was on the ‘junk’ list (below Ba1) back in 2011 ratings agencies like Standard & Poor’s and Moody’s received padded envelopes full of wrappers and other rubbish from outraged Portuguese citizens with notes attached stating ‘we are not junk’.