LISBON: DBRS, the only leading international credit rating agency that rates Portugal’s sovereign debt as better than junk, said that it was maintaining its BBB (low) rating, its lowest investment grade, and with a continued stable outlook. The decision by Toronto-based DBRS means that Portuguese government debt continues to be eligible for the European Central Bank’s bond-purchase programme, which has helped keep a lid on bond yields.
It was widely expected, after Portugal’s minority Socialist government submitted a draft state budget for 2017 to parliament that pledges it to meet previous commitments to reduce the public sector deficit as a proportion of gross domestic product. In a written reaction to the news, Portugal’s finance minister, Mário Centeno, welcomed the confirmation of an announcement that he had previously said he expected.
DBRS did, however, express continued concern in its statement about Portugal’s high level of state indebtedness. Fitch Ratings, Moody’s Investors Service and S&P Global Ratings – the other three rating agencies from which an investment grade would make debt eligible for the ECB programme – all rate Portugal’s government debt as junk.
