Fitch must comment today on the ‘rating’ of Portugal

The financial rating agency Fitch has scheduled today a pronouncement on the ‘rating’ of Portuguese debt, after having lowered the outlook from ‘positive’ to ‘stable’ on April 17 due to the covid-19 pandemic.

On April 17, Fitch revised the outlook for the Portuguese economy from ‘positive’ to ‘stable’, but maintained the ‘rating’ at BBB, investment level (above ‘trash’).

“The review of the outlook reflects the significant impact of the global covid-19 pandemic on the Portuguese economy and the budgetary position of the Sovereign (State). It is likely that the shock will interrupt previous trends in improving economic growth, the ratio of public debt to GDP (Gross Domestic Product) and the resilience in the banking sector, ”said Fitch, in a position that was not scheduled in the official calendar. .

The agency says that Portugal's “small and open economy, with its high dependence on tourism, is exposed to negative risks from the severity of the pandemic, particularly if the country's confinement persists beyond the baseline scenario” envisaged by Fitch, which it was, on April 17, a recession of 3.9% of the Portuguese economy in 2020.

Also during the pandemic crisis, on April 24, in an unscheduled pronouncement, Standard and Poor's revised the Portuguese public debt outlook from 'positive' to 'stable', reaffirming the 'BBB' rating for debt long-term public health.

Despite the downward revision of the outlook, Portuguese authorities are praised, in a statement from S&P, for their success in stabilizing and mortality rates in the pandemic of the new coronavirus, but the agency said that this year's “severe and synchronized global recession” will weigh in the “small and open Portuguese economy”.

On March 20, the rating agency DBRS Morningstar maintained Portugal's rating at BBB (high), with a stable outlook, but considered that the “small and open” nature of the Portuguese economy places it vulnerable to the crisis.

According to the Canadian financial rating agency, “at the very least, the Portuguese economy is likely to slow down in the first quarters of the year as tourism revenues decline, and consumer confidence and industrial sentiment weaken.”

Even before the outbreak of the pandemic, on January 17, the American company Moody's maintained Portugal's financial rating at 'Baa3', above garbage, and the outlook in positive, having not yet pronounced itself after the pandemic outbreak of 19.

The ‘rating’ is a rating given by credit rating agencies that assesses the credit risk (ability to pay the debt) of an issuer, which can be a country or a company.

Each rating agency has its own rating scale, but in all of them the best rating is triple A (AAA) and the letters C or D indicate ratings in which the investment is considered risky or speculative (commonly referred to as 'junk') ').

JE (RN / ECR) // CSJ

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