DBRS confirms Portugal rating in ‘A’ high with positive trend

A dBRS rating agency today confirmed Portugal’s rating in “A” high, with a positive trend.

 
“The DBRS ratings confirmed the long-term classification in foreign and local currencies of the Republic of Portugal in ‘A’ (high)”, reads in a note published today.

The trend of long-term classifications remains positive.

Morningstar DBRS also confirmed Portugal’s short-term classification in “R-1” (mean). The trend of short-term classifications remains stable.

According to the same note, the positive trend reflects Morningstar’s view that Portugal’s public debt ratio will continue to decrease, “despite a challenging external context.”.

This path is strengthened with stronger growth than expected and with a “wise fiscal plan” for next year.

On the other hand, he stressed that after three years of budgetary surpluses, Portugal must record at least a balanced budget this year, “unexpected save”, sustained by prudent management and favourable growth dynamics.

The medium-term growth prospects remain favourable, supported by a “strong labour market”, EU funds and budget support.

However, DBRS warned that increasing geopolitical and commercial tensions remains the main risk to growth and public finances.

“Portugal’s solid budgetary record since 2016 and the marked improvement of its banking sector, after years of balance sheet recovery also support its solvency,” he added.

The financial rating agency also stated that ratings are affected by the country’s high public debt ratio as well as its ‘per capita’ product and comparatively low growth potential.

Portugal’s net external liability position also remains considerable, “although it has improved significantly in the last decade.”.

The Minister of Finance said, this Thursday, to be confident that Portugal will have more rises in the ‘rating’, if maintaining the path of debt reduction.

In a seminar on the State Budget for 2027, promoted by the Portuguese Industrial Association (AIP) in Lisbon, Joaquim Miranda Sarmento pointed out that the reduction of public debt and the balance of public accounts “has led to significant improvements in the country’s rating.

“Since April 2024 we have had five rises,” the minister signaled, pointing out that there are only six eurozone countries ahead of Portugal in terms of classification, three of which have “triple A (AAA)”, the highest rating awarded by the major financial rating agencies.

Miranda Sarmento pointed out that Portugal is only one rise away from having only three better ranked countries – Germany, Luxembourg and the Netherlands.

Moody’s is due to comment on Portugal’s ‘rating’ next week