Ratings agencies put Portugal back under spotlight

It’s that time of year again: the moment that the world’s ‘big four’ ratings agencies turn their spotlight on Portugal and determine the inherent ‘risk’ for potential investors.

Moody’s will be the first to make its call, say reports, and all indications are that it will maintain its “high risk” rating.

As RTP explains, ratings basically evaluate the likelihood of a country being able to pay back its loans.

The state of Portugal’s “fragile banks, large private public debt and low growth” remain very much the same as they were during the last evaluations – hence experts doubt very much that Portugal’s rating will be increased.

Analyst Marisa Cabrita of Orey Financial has backed João Pereira Leite of Banco Carregosa, saying she cannot see any of the ratings agencies being more positive over Portugal – which leaves the ‘billion euro question’ will Canada’s DBRS maintain the only rating the big four give that keeps Portugal’s head above water?

DBRS’ is due to pronounce in April after Standard & Poors, and Fitch. It has consistently put Portugal’s debt just above the dreaded ‘rubbish category’, enabling the country to access ‘cheap money’ via the ECB’s bond-buying programme.

Failure to secure DBRS rating would spell financial disaster. Thus the real question is what will DBRS decide.

SIC television news has been in touch with the agency which has thrown a curved ball into the mix, saying any decision to nationalise or indeed liquidate Novo Banco would compromise DBRS’ rating.

(Discussions over the future purchase of Novo Banco by equity company Lone Star Funds are still very much ongoing, while yesterday in parliament MPs debated for and against temporary nationalisation of the bank).

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