The agency currently rates Portugal at Ba1 and at the beginning of the month the country hoped it would hike this up a notch, but that didn’t happen. Only now has Moody’s issued an up-date note regarding the country’s credit risk without, however, making any alteration to the rating.


Moody’s said the main risk factors in Portugal were of a legal and political nature related with the continued financial consolidation, taking into account that the Portuguese Constitutional Court rejected several measures the government proposed.


The rating agency also said that there was continued “weakness in the banking sector” pointing out the specific cases of Banco Espírito Santo (BES), in the meanwhile recapitalised and rebranded as Novo Banco, and Banco Comercial Português (BCP), which failed the stress tests and needs to boost its capital.


On the bright side, the agency noted government liquidity and the country’s financing capacity which “improved significantly over the past 18 months”, recalling that this was the factor behind the rise in the rating to Ba1 last July.