Moody’s revises Portugal view to positive

Moody's Investors Service said it revised its outlook for Portugal to positive from stable, citing a faster-than-expected reduction in government debt.

Another reason for the outlook revision is that Moody’s sees continued improvements in the healthiness of the country’s banking sector.

“While some institutions continue to have an impact on the government finances, the system as a whole is becoming more robust. It has increased its loss-absorption capacity, non-performing loans, though high, continue to fall and ongoing declines in system-wide leverage enhance the future creditworthiness of borrowers,” said Moody’s in a press release.

“The significant reduction in the debt burden of the domestic private sector over the past few years also contributed to the improvement in asset quality. Private debt (households and non-financial corporations) outstanding fell to 169% of GDP at the end of 2018, according to the ECB, with continued declines in both households' and non-financial corporates' leverage,” Moody’s said.

The agency also affirmed Portugal’s Baa3 rating.

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