S&P announces this Friday its decision on Portugal's public debt rating, with no changes expected.
Portugal is once again the target of Standard & Poor’s (S&P) assessment this Friday, at a time when the national economy is showing signs of recovery. The American agency is expected to maintain Portugal’s public debt rating and outlook.
“S&P has assigned Portugal a ‘BBB’ rating with a stable outlook, something that should remain unchanged in its decision [this Friday],” Filipe Silva, investment director at Banco Carregosa, tells ECO. In the same line, Nuno Mello, an analyst at XTB, anticipates: “Similar to what was decided by S&P in the last assessment, Portugal’s public debt rating should remain at ‘BBB’.”
In the last assessment, in September last year, the agency in question maintained the country’s public debt rating at “BBB” for the long term and “A-2” for the short term. S&P should also have pronounced on March 2021, but decided not to do so, keeping the national debt rating at “BBB”, with a stable outlook.
This Friday’s assessment will therefore be the first of this year. In anticipation and speaking to ECO, Filipe Silva stresses that the Delta variant of the new coronavirus “delayed economic recovery worldwide” and Portugal did not escape this reality. “However, the success of the vaccination plan, the lifting of some restrictions, together with European Union funds, as well as the access to liquidity at very low cost should help the economy, so some of the most penalised sectors should see a recovery in 2022,” anticipates the specialist.
Nuno Mello, meanwhile, points out that “despite the deterioration in budgetary accounts driven by a significant reduction in revenue and an increase in spending to deal with the pandemic, the progress of vaccination – Portugal being the fifth country in the world with the highest complete vaccination rate -, the reopening of the economy and the improvement in economic indicators, particularly GDP, should lead to a gradual reduction in the deficit over the next two years.
The analyst projects, on the other hand, that S&P will focus its assessment on “high public debt, low economic growth potential and stress in the financial system”, besides “possibly” referring to the risks of the new variant of the pandemic virus, which could again dictate more restrictive measures.