Portugal sovereign rating review today – RBC CM
|Research Team at RBC Capital Markets, suggests that the DBRS are due to review Portugal’s sovereign debt rating today which is likely to be on the investors radar.
Key Quotes
“To recap, DBRS currently rate Portugal one notch above investment grade at BBB (low) with a stable outlook, which was affirmed at the end of April and are the only one of the four ratings agencies whose assessment the ECB uses to determine eligibility as investment grade that currently rates Portugal as such. Were DBRS to downgrade Portugal, it would mean that Portugal’s sovereign debt was rated sub-investment grade by all four ratings agencies.
The most immediate impact of that would be that it would no longer be eligible for purchase under the current rules of the ECB’s sovereign bond buying programme but which would also see Portuguese banks face higher costs of ECB funding. DBRS has warned since its last review that pressure is growing on the Portuguese rating pushing the yield on Portugal’s debt higher with comments from chief economist in early October that Portugal was in a vicious cycle of high debt, low growth and stalling reforms causing yields to rise sharply though bonds subsequently rallied after the Portugal Finance Minister said his expectation following a meeting with DBRS was that they would keep their investment grade rating. On the same day as the DRRS decision, the Portuguese government is due to present its draft to parliament for approval.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.