Lisbon, Sept. 11, 2025 (Lusa) - The review of Portugal's rating, scheduled for this Friday by the Fitch agency, is dividing analysts, with doubts about whether the rating will be raised or maintained, despite the positive outlook.
"The likelihood of Fitch revising Portugal's rating upwards this Friday is high. The agency is currently keeping the rating at A- with a positive outlook, which means that it recognises solid fundamentals and has already left the door open to a rise," said Paulo Monteiro Rosa, senior economist at Banco Carregosa, in response to Lusa.
However, he said, "Fitch may choose to wait a few more months, first confirming the 2025 budget execution and the approval of the 2026 budget".
For his part, Vítor Madeira, from XTB, believes that "Fitch will most likely keep Portugal's sovereign rating at A-, with a positive outlook", pointing out that "despite the favourable evolution of some indicators, there is still not enough robust and consistent evidence to justify an upgrade to A".
For the analyst, “the economic growth forecast for the coming quarters is moderate, the budget balance, although positive, needs to be confirmed in the medium term, and the debt trajectory as a percentage of GDP, although declining, should lose pace between 2025 and 2028” in addition to “still being above 90% of GDP”, factors that “make it premature to expect an immediate improvement”.
Paulo Monteiro Rosa also emphasised that "successive budget surpluses, the downward trajectory of public debt, which should fall below 90% of GDP in 2026, and the fact that S&P went ahead with a revision to A+ at the end of August create additional pressure for Fitch to reduce this gap".
For Banco Carregosa's senior economist, "the market has already reflected part of this expectation", pointing out that the spreads between Portuguese and German debt "are at 2008 lows, close to 40 basis points, showing investor confidence".
Vítor Madeira believes that Fitch will look at issues such as the labour market, which "continues to show positive signs", GDP growth, which "slowed in the first quarter compared to the 4th quarter of 2024, but recovered in the 2nd quarter" and public debt in relation to GDP, which "should continue to fall, albeit at a slower pace, supported by an excessive tax burden".
Paulo Monteiro Rosa also points to "fiscal solidity, debt trajectory and market confidence" as assumptions for Fitch's revision, also indicating "external variables, such as the European environment, the evolution of the ECB's monetary policy and the geopolitical context", but emphasising that "internal indicators clearly point to a strengthening of confidence in the sustainability of Portuguese public finances".
The analysts also realise the potential risks to the national rating, with Vítor Madeira pointing to the "moderate growth of the European economy", as well as "the expected slowdown in the pace of public debt reduction over the next few years". According to the XTB analyst, "the governmental turbulence following the fall of the government could once again generate political instability", there are also "risks linked to budgetary pressures" and a geopolitical context that "remains worrying, which could inflate fuel prices and cause further price shocks".
Paulo Monteiro Rosa emphasised "the external environment" which could lead to "a deterioration in financing conditions, whether due to geopolitical tensions or the ECB's monetary policy decisions", pointing out that "the most relevant risk at the moment comes from France".
DBRS rates sovereign debt at A (high), and Moody's rates it at A3, while Fitch currently assigns an A- rating. S&P was the last agency to assess the rating, on 29 August, and upgraded the rating from “A” to “A+”.
ALN/ADB // ADB.
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