Moody's and Scope assess Portugal's rating

Moody's and Scope's assessments of Portugal's rating will be announced this Friday and analysts interviewed by Lusa admit the possibility of an upgrade, although maintaining it is also on the table.

As far as Moody's is concerned, it is currently the lowest rating agency that assigns a rating to Portugal, Baa2, with a positive outlook , Banco Carregosa's Investment Director, Filipe Silva, told Lusa.

The analyst highlights that Portugal “has managed to maintain growth, sustained by exports and tourism, despite the global slowdown”, while, at the same time, “the debt-to-GDP ratio has fallen, falling below 100%, giving investors greater confidence, a factor that ends up being reflected in the spread ” that the country currently has “versus Germany, 50 basis points”.

The expectation is that Moody's will raise Portugal's rating and maintain the positive outlook .

Filipe Garcia, economist at IMF – Financial Markets Information, also highlights that “Moody's has not changed its rating and outlook since November 2023, so it has been a long time”.

For the economist, “there are conditions for Moody's to raise the rating , even if it maintains a stable outlook since November 2023”, although he also admits that the agency may choose to simply improve the outlook, “taking into account that we are facing an electoral process with an uncertain outcome and following the fall of a government that lasted only one year, which contrasts with the previous political stability”.

Thus, Filipe Garcia considers that “Moody's has all the conditions to raise the rating to A2, but it can only raise the outlook if it understands that it is safer to wait for the outcome of the elections and developments in the tariff war”.

On the other hand, Xtb analyst Vítor Madeira argues, in statements to Lusa, that Moody's should maintain the rating , taking into account that, despite the reduction in the debt ratio and the ability to maintain credit obligations with creditors, there are some signs of economic slowdown and also “significant political instability”.

This instability “may trigger failures in the State’s budgetary compliance and create higher budget deficits” and also “postpone PRR projects or even cancel them, which may have an impact on the country’s economy”.

As for Scope, analysts point to the “A” rating being maintained, but Filipe Silva believes that it could have a positive outlook and Vítor Madeira admits that the outlook could be stable.

This year, both DBRS and S&P improved the sovereign debt rating in their reviews, which took place even before the political crisis, while Fitch maintained Portugal's rating at “A-“.

The rating is an assessment given by financial rating agencies, with a major impact on the financing of countries and companies, as it assesses credit risk.