Moody's assesses Portugal's rating today and may improve its outlook

Moody's will assess Portugal's sovereign debt today, after the last review left the rating and outlook unchanged, something that could be improved now, according to analysts heard by the Lusa agency.

"Expectations for this week's decision are that the rating will be maintained, since there are no significant changes in the macroeconomic, strategic or political field that could affect Portugal's ability to meet its credit obligations” Vítor Madeira, an analyst at XTB, told Lusa.

Moody's last assessment of Portugal's sovereign debt was in May, when it kept Portugal's rating unchanged at 'A3', with a 'stable' outlook.

Paulo Monteiro Rosa, Senior Economist at Banco Carregosa, recalls to Lusa that on that occasion, the agency considered that there were high risks of new early elections if the state budget for 2025 (OE2025) was rejected. "However, these risks have disappeared with the general approval of the State Budget for 2025,” he points out.

The economist points out that "Portugal has shown positive economic indicators, especially in the reduction of public debt, which could positively influence Moody's assessment”.

"The political stability recently achieved with the approval of the 2025 Budget could also be a favorable factor in the agency's analysis, since trust in government institutions is one of the criteria assessed,” he adds.

 As for the outlook, Vítor Madeira argues that it "remains stable”, which suggests that unless there are unforeseen changes, such as a deterioration in global economic conditions or a worsening of internal risks, there is no reason for this assessment to be changed.”

On the other hand, Paulo Monteiro Rosa points out that "the last of the main rating agencies to make a statement was Fitch Ratings, on September 20, which maintained Portugal's rating at ‘A-’ and upgraded the outlook to positive”, which "reflects the continued progress in reducing public debt, the commitment to a prudent fiscal policy and external deleveraging, which reduce Portugal's vulnerabilities”.

The economist therefore believes that "it is more likely that Moody's will upgrade Portugal's outlook to positive, in line with the other main credit rating agencies”.