Edition 1454
16 December 2017
Edition: 1454

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Stocks surge as Portugal is upgraded out of junk status

in News · 21-09-2017 15:07:00 · 0 Comments

Portugal’s stock market surged this week and its government borrowing rates started falling after the country recovered its investment-grade rating from Standard & Poor’s.

Stocks surge as Portugal is upgraded out of junk status

The Lisbon stock exchange rose more than one percent on Monday and the 10-year bond yield dropped 0.29 percentage points - an unusually large one-day increase - to 2.49 percent, the lowest rate since late 2015.
S&P said last Friday that Portugal has made “solid progress” in restoring its financial health since needing a 78 billion euro bailout in 2011 amid the Eurozone crisis.
It raised its rating from BB+, or junk status, to BBB-.
Fitch and Moody’s, the other two main ratings agencies, still rate  Portugal’s debt at junk.
After a period of austerity and recession,  Portugal  expects the economy to grow 2.5 percent this year.
The news was received with “surprise” by analysts who anticipate a positive impact on the country and individuals with increased interest by investors in Portuguese companies following this rate revision.
“It was a surprise in terms of ‘timing’; it was earlier than expected”, Bernardo Câncio from Banco Big told Lusa News Agency, an opinion shared with José Lagarto, from Orey Financial, who was expecting that S&P would change their outlook to ‘positive’ before altering the rating of Portuguese government debt.
“The political discussion is also helping the market, calming investors”, about the progress being made in public finance and the economy, Bernardo Câncio said.
José Lagarto, from Orey, stressed the importance the impact will have on investor interest in Portuguese companies.
Fitch, which kept Portugal’s rating as ‘junk’ in June, has meanwhile raised its outlook to positive, indicating they may upgrade the country to investment grade at the end of the year.
But these figures were slightly diluted by the release of
new figures which showed Portugal currently has the fourth highest debt level in the world.
The numbers show that current debt levels have risen to just over 130 percent of the GDP, but Finance Minister Mário Centeno has pledged that his government will enforce the biggest drop in debt levels in 19 years by the end of 2017.

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Edition 1454
16 December 2017
Edition: 1454

Read this week's issue online exactly as it appears in print.

Twitter