The Canadian ratings agency, on which Portugal’s financial stability has depended when the other three top agencies classified the country’s bonds as ‘junk,’ has lifted its opinion to BBB, which - at the moment - is as good as it gets.This new debt rating is the second level of 'quality investment,' with DBRS adding a ‘stable’ outlook, meaning that short-term changes are not likely.
The move from BBB- to BBB "reflects DBRS's assessment that Portuguese debt sustainability has improved," the agency said in a statement released on Friday.
"The improvement in public finances in Portugal has become more resilient, which is contributing to the downward trend in the public debt ratio", which fell from 130% to 125.7% by the end of 2017 and should continue to decline."
DBRS stated that, "budgetary discipline has been maintained, while interest rates have continued to fall," and, "the economy continues to grow at a solid pace."
Finally, the decision involved an assessment that banks’ bad credit is falling.
DBRS stated that, "budgetary discipline has been maintained, while interest rates have continued to fall," and, "the economy continues to grow at a solid pace."
Finally, the decision involved an assessment that banks’ bad credit is falling.
The DBRS rating was decisive to Portugal’s survival as it allowed the treasury access to the ECB's liquidity lines and the debt buy-out programme launched in 2015.
With S&P and Fitch ratings now above ‘junk,’ the importance of DBRS is reduced but its upgrade is very welcome as the government seeks good news despite a mountain of debt.
