The credit rating of Portuguese sovereign debt remained among the lowest for several years following a crisis that eroded investor and market confidence.
Over recent years, the administrations of António Costa and later Luís Montenegro have focused on reducing public debt and achieving budget surpluses or closely reaching that goal, thereby improving Portugal’s image among investors.
Consequently, Portugal’s credit rating has reflected this shift in public account management. Currently, DBRS rates the nation’s sovereign debt at A (high), Moody’s at A3, and Fitch at A-.
The latest review came from S&P on August 29, upgrading its rating from ‘A’ to ‘A+’, just six months after a previous increase.
“The probability of Fitch upgrading Portugal’s rating this Friday [today] is high. The agency currently holds the notation at A- with a positive outlook, indicating recognition of solid fundamentals and leaving room for an upgrade,” stated Paulo Monteiro Rosa, a senior economist at Banco Carregosa, in a statement to Lusa.
However, he mentioned, “It’s not impossible that Fitch may choose to wait a few more months, first confirming the 2025 budget execution and the 2026 budget approval.”
Meanwhile, Vítor Madeira of XTB believes that “it is most likely that Fitch will maintain Portugal’s sovereign rating at A-, with a positive outlook,” noting that “despite the favorable evolution of some indicators, there is not yet sufficiently robust and consistent evidence to justify an upgrade to A.”
Each rating agency has its own evaluation scale, with the highest rating being triple A (AAA), while C or D letters indicate ratings where investment is considered risky or speculative (commonly known as ‘junk’).
Ratings are classifications assigned by financial rating agencies that assess the credit risk (ability to repay debt) of an issuer, which can be a country or a company.
