The sustained decline in the public debt ratio and the reduction of external vulnerabilities, alongside robust economic growth, are driving the change in perspective. However, the high public debt, moderate growth potential, and elevated external vulnerabilities pose challenges.
The German agency confirmed today the long-term issuer and senior unsecured debt ratings of the Republic of Portugal at A, both in local and foreign currency, and revised the outlooks from stable to positive.
Scope also confirmed Portugal’s short-term issuer ratings at S-1, both in local and foreign currency, and revised the outlooks from stable to positive.
The agency stated that the outlook revision reflects the expectation of a solid medium-term downward trajectory in the debt-to-GDP ratio, driven mainly by solid, though declining, primary surpluses and robust nominal growth.
Furthermore, the positive outlook is supported by a sustained reduction in the country’s external vulnerabilities, coupled with a favorable economic performance despite rising geopolitical and trade tensions.
The agency cautioned about several risks, highlighting that Portugal’s credit ratings are challenged by a high, though declining, debt-to-GDP ratio, moderate growth potential limited by structural factors, including an aging population, and vulnerability to external shocks due to still elevated net external debt and an open economic structure.
The agency projects GDP growth to remain solid, averaging 1.8% until 2030, which will continue to support the convergence of the country’s per capita GDP with eurozone income levels, further reinforcing Portugal’s ability to withstand economic shocks.
Scope joins other credit agencies in improving estimates for the national economy, similar to Fitch, which upgraded Portugal’s rating from A- to A with a stable outlook, DBRS, which rates sovereign debt at A (high), and Moody’s at A3.
S&P upgraded the rating from A to A+ just six months after a previous upgrade.
A rating is an assessment given by financial rating agencies, with significant impact on the financing of countries and companies, as it evaluates credit risk.
