KBRA Affirms A-/K1 Ratings for Portuguese Republic; Outlook Stable
9 Feb 2024 | Dublin
KBRA Europe (KBRA) affirms the long-term issuer ratings of A- for the Portuguese Republic. KBRA also affirms the short-term ratings of K1. The Outlook on the long-term ratings is Stable.
| This credit rating is an unsolicited credit rating | |
|---|---|
| With Rated Entity or Related Third-Party Participation | Yes |
| With Access to Internal Documents | Yes |
| With Access to Management | Yes |
KBRA's affirmation of the ratings reflects Portugal’s enhanced resiliency due to structural transformation of the economy post-global financial crisis, which has reduced macro and fiscal imbalances, while also improving Portugal’s economic dynamism. Portugal’s government finances, including debt dynamics, continue to improve. Macro indicators suggest a sustainably faster pace of growth should endure over the medium-term helping to consolidate key debt ratios, although near term prospects remain challenged by the rate environment. Absorption of European Union Recovery and Resilience Facility funds also underpin Portugal’s macro prospects. In contrast to these positive trends, the upcoming election carries political and policy risk and could potentially lead to parliamentary deadlock, in KBRA’s view. KBRA continues to monitor developments in the Middle East and the Red Sea, but acknowledges the risks posed to Portugal’s rating are contained, at this juncture.
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