Moody’s hikes Portugal ratings

Moody’s Investors Service said it raised Portugal’s long-term foreign- and local-currency issuer and senior unsecured ratings to A3 from Baa2. Concurrently, the agency upgraded the senior unsecured local-currency medium-term note program rating to (P)A3 from (P)Baa2 and revised the outlook to stable from positive.

“The two-notch upgrade of Portugal's ratings to A3 from Baa2 reflects the sustained positive credit effects over the medium term of a series of economic and fiscal reforms, private sector deleveraging and ongoing strengthening of the banking sector. Portugal's medium-term outlook is supported by significant private and public investments as well as the implementation of further structural reforms, both linked to the country's National Recovery and Resilience Plan (NRRP),” Moody’s said in a press release.

The agency said the outlook balances the higher rating and the risks to the country’s credit profile.

“More positive trends in economic and fiscal strength than Moody's currently expects are balanced against recent evidence of political risks. Corruption investigations resulted in the resignation of Prime Minister Antonio Costa, in the wake of which President Marcelo Rebelo de Sousa called early elections. While evidence so far is that Portugal's institutions allow the country to address the issue effectively, these political developments may slow progress in investment and reforms linked to Portugal's NRRP,” Moody’s said.

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