DBRS to Evaluate Portugal's Credit Rating Today

The DBRS is set to evaluate Portugal's credit rating today, marking the last assessment of the year. Analysts are predicting that the current 'A' rating will be maintained, but an upgrade is not ruled out. This evaluation comes after a favorable context, with Portugal's public finances showing improvement and a sustained reduction in public debt.

According to Filipe Silva, director of investments at Banco Carregosa, the DBRS assessment takes place in a favorable context, making a rating upgrade a real possibility. In May, the DBRS decided to maintain Portugal's rating at 'A', while improving the outlook from stable to positive. However, Silva cautioned that geopolitical uncertainty, European growth risks, and the need for budgetary discipline may lead the agency to adopt a prudent stance.

The DBRS classification of Portugal acknowledges the improvement in public finances and the sustained reduction in public debt. There are solid arguments for an upgrade, including consecutive budget surpluses, the resilience of the Portuguese economy, and improved debt sustainability indicators. Recent upgrades by Fitch and Scope reinforce the international recognition of Portugal's credit profile evolution.

João Cruz, market analyst at Xtb, also expects the rating to be maintained at 'A (high)' with a positive trend. The DBRS hinted at this possibility by including Portugal in the list of European countries entering 2027 with a positive trend. Cruz advises prudence due to factors such as inflation, particularly energy prices, the rise in debt interest costs, and the approval of the 2027 State Budget.

The Portuguese Minister of Finance had indicated that the DBRS might make some changes given the positive outlook. The next evaluation will be by Moody's on November 20, which will be the last review by financial rating agencies this year. The DBRS evaluation will provide insight into Portugal's creditworthiness and potential future upgrades.

Analysts believe that the DBRS will likely adopt a cautious approach, maintaining the current rating while leaving room for a potential upgrade in 2027. The assessment will consider various factors, including the country's economic resilience and budgetary discipline. A positive outcome could further solidify Portugal's credit profile.

The evaluation by DBRS and subsequent reviews by other rating agencies will be crucial in determining Portugal's credit rating and its ability to attract investments. The country's economic performance and fiscal management will continue to be closely monitored by analysts and investors alike.

Key points

• The DBRS is expected to maintain Portugal's current 'A' credit rating with a positive outlook.
• A rating upgrade is possible due to consecutive budget surpluses and improved debt sustainability indicators.
• The evaluation will consider factors such as geopolitical uncertainty, European growth risks, and budgetary discipline.