CALDEIRÃO DE BOLSA

Financial Times Escreveu:What should Portugal really be rated?

Posted by Neil Hume on Jul 13 10:36.
What then to make of Moody’s decision to cut its rating on Portugal by two notches to A1?

Perhaps unsurprisingly not a lot.

The view in the market is that Moody’s, which has a new sovereign team, is merely revising their previously over optimistic assessments long after the market has moved on and rationalised the risks.

Indeed, the downgrade has had a minimal impact on Portugal’s CDS and the euro’s dip this morning has more to do with the lower-than-expected German ZEW headline than the Moody’s downgrade.

So what then should Portugal really be rated?

In the view of Harvinder Sian at RBS it should rated at least BBB:

I think Portugal should be rated with a BBB handle (minimum). The low nominal growth trend is chronic and means that the good record of fiscal austerity is less relevant. More importantly, the total economy debt is near 350% of GDP, with non-resident borrowing (both public & private sectors) at 205% of GDP, meaning that the adjustment to a more risk-off world will be painful and needs to be carefully managed by European authorities.

It is this scarcity of foreign funding that helps to explain why Portuguese bank reliance on the ECB has been rising rapidly. For example, the recourse to the ECB was EUR 18.5 bn in April and for the latest data point in May, this leapt to EUR 36.8 bn, so nearly doubling. Are there any domestic resources available that help to alleviate these concerns? No. The net foreign investment position is near -109% of GDP.

That does not mean Portugal is finished, only that it will rely on the ECB and Northern European balance sheets for its adjustment process.

The question here, of course, is whether Northern Europe has the appetite to fund leverage in the public and private sectors in the periphery. This is also a question that could be asked of Ireland and Spain.

And on the subject of Spain, note that Moody’s has the country on review for a downgrade — from its current leve of AAA! Sian thinks a downgrade could follow in the next couple of weeks.

Although don’t hold your breath for anything too aggressive.

For that we might need some help from the ratings newcomer — Dagong Global Credit Rating Co.

pvg80713 Escreveu:

PequenoInvest Escreveu:Como já era esperado houve um "mini susto" mas agora já está quase a ir para o verdinho

mas enquanto os outros sobem bem mais de 1%, o PSI não.

PequenoInvest Escreveu:Como já era esperado houve um "mini susto" mas agora já está quase a ir para o verdinho

Seaman Escreveu:
quem avalia o "rating" dessa agência americana?

Seaman Escreveu:quem avalia o "rating" dessa agência americana?

De acordo com a Moody`s, esta revisão em baixa tem em conta o facto de "a força financeira do Governo português continuar a enfraquecer a médio prazo, evidenciado pela deterioração crescente dos números da dívida do país".