DBRS reiterated the Republic’s rating at BBB High (three levels above junk), but improved the “outlook” (perspective for the evolution of credit quality) – stable to positive.
Since October 4, 2019, the agency has maintained this rating – data in which it raised the rating from BBB to BBB High, while lowering an outlook from positive to stable.
Now, almost two and a half years later, the DBRS has once again put the Portuguese Republic’s “outlook” on a positive level, which means that there is a greater chance of improving the country’s public debt rating.
The agency says its decision reflects DBRS’s assessment that as Portugal’s economic economies are associated with the pandemic as it is waning, credit and economic prospects improve.
“Despite the abrupt economic and health shock caused by the pandemic, last year there was a contraction of 8.4% in 2020, which led an economy to register a contraction of 8.4% in 2020, a healthy recovery and expects The economy is expected to return to its pre-pandemic levels in the second quarter of 2022,” says the report released by the agency, adding that the crisis does not appear to have severe long-term economic damage.
In addition to growth prospects, being supported by the strengthening of political stability following the majority of elections for the next few years, a population with the lower classes of the majority, more robust in Europe and more robust stimuli from Europe of the European Union to improve the productive capacity of the economy, strengthened.
The agency also notes that the rating is also supported by the fact that Portugal belongs to the Eurozone and belongs to the economic governance structure of the European Union – although the legacies of the Eurozone crisis continue to contribute to vulnerabilities, namely high indebtedness. public debt, the financial system’s still high non-performing loans and the relatively low potential for economic growth.
DBRS also says that Portugal’s rating could be an “upgrade” if the country’s macroeconomic performance continues to improve and target if the public debt-to-GDP ratio settles into a “firm downward trajectory”.
“The degree of public uncertainty-GDP, although still high, is improving. The increased response to the pandemic, from such a rapid rise, led to an increase of 135.2%, which corresponded to a rapid rise of 135.2% of almost 19 points of GDP face 2 percent 9. (…) Despite the large increase in this cost of service of the ratio 10, recent years (…) and the current perspective that interest costs will be 1 88% of GDP in 2025, against 3% in 2019”, warns the agency.
This was the first date scheduled by RS to comment on Portugal, and the evaluation is scheduled for the next 26th of August.
Nicknamed Triple Production Factories The “subprime” crisis started in the US in 2008, as rating agencies no longer have the weight of other capital markets.
Although there are more than 100 active rating agencies around the world, the so-called “three sisters” group, which has around 95% of the world market: Fitch, Moody’s and Standard & Poor’s is unavoidable. Due to the role it played in the global financial crisis, customers started in 2008 a being known as viriase and which originated in the Great so-called “subprime” in the United States, with a financial concession in the United States, with a high risk financial concession given its credit capacity – are also nicknamed “three musketeers” and “triple A production plants”. The big three are joined by the “first right” DBRS Morningstar, with a market share of around 2%-3%.
Despite the criticism they received in the late 2000s, for giving excellent ratings that proved unreasonable during the crisis, as was the case with Lehman Brothers in September 2008 -, they continue to occupy their place on the world podium.
At the moment, DBRS is the agency that assigns the highest rating to Portugal. Standard Poor’s, Fitch and Moody’s expect Portuguese sovereign debt to be at the second level above “junk” – that is, at the bottom of the quality investment category.
DBRS never placed the country’s debt at the level of investment debt, being therefore the agency that had the power to connect or disconnect Portugal from the European Central Bank (ECB) machine, since it was the only one that guaranteed the eligibility of the national debt. for the ECB’s purchasing programmes.
(news updated at 21:58)