Moody’s to put stay on rate rise?
The US ratings agency Moody’s is unlikely to raise Portugal’s rating because of its current political crisis according to analysts.
It was expected to up Portugal’s rating today from ‘Baa2’ to ‘Baa1’, but with the political instability with a general election on the horizon in March, together with a slowdown in the global economy, it seems unlikely that the rating rise will happen, despite an improvement in Portugal’s annual budget with a €7Bn surplus, which was suggested would spur a rating rise this month.
“I don’t expect Moody’s to lower (Portugal’s rating) or perspective” Filipe Garcia, an economist and IMF consultant told the online news source ECO, although he said that despite the State Budget being approved in general, Portugal did deserve a rating rise to ‘Baa1’.
The economist admitted that the political crisis that unfurled after the resignation of Prime Minister António Costa’s resignation on November 7 meant “greater uncertainty for the future governance of the country and, in particular, the economic indicators showing an economic slowdown for Portugal” leading to Moody’s and other ratings agencies to be cautious and retain current ratings where they are.