23 Mar 2015
‘Positive’ news from Portugal – Danske Bank
FXStreet (Edinburgh) - Chief Analyst at Danske Bank Allan von Mehren assessed the recent decision by S&P to revise up Portugal’s outlook to ‘positive’.
Key Quotes
“S&P lifted the Portuguese rating outlook to ‘positive’ on Friday after market close. The rating was kept unchanged at BB”.
“The outlook change follows as S&P expects the ‘economic recovery will broaden during 2015-2017’. We expect a rating upgrade this year implying that Portugal will return to investment grade (IG) universe”.
“Fundamentals are broadly in line with Italy and the two-notch gap seems unjustified, in our view. The market reaction is likely to be muted”.
“We expect the 10Y spread to open 3-5bp tighter versus Germany. The upcoming review by Fitch on Friday 27 March has the potential to be a bigger market mover. Fitch already has Portugal on ‘positive’ outlook and one notch below investment grade”.
Key Quotes
“S&P lifted the Portuguese rating outlook to ‘positive’ on Friday after market close. The rating was kept unchanged at BB”.
“The outlook change follows as S&P expects the ‘economic recovery will broaden during 2015-2017’. We expect a rating upgrade this year implying that Portugal will return to investment grade (IG) universe”.
“Fundamentals are broadly in line with Italy and the two-notch gap seems unjustified, in our view. The market reaction is likely to be muted”.
“We expect the 10Y spread to open 3-5bp tighter versus Germany. The upcoming review by Fitch on Friday 27 March has the potential to be a bigger market mover. Fitch already has Portugal on ‘positive’ outlook and one notch below investment grade”.