Portugal's commitment to fiscal targets and a healthy relationship with its European partners are important supports for the credit rating it needs to remain eligible for ECB bond buying, a senior DBRS official said on Monday.
The Socialist government last week approved its long-term budget plan, which meets all agreements with its left-wing allies and reduces the deficit in line with EU commitments.
DBRS will on Friday review Portugal's last remaining investment-grade rating. The ECB requires one of its four recognised agencies - DBRS, Standard & Poor's, Moody's and Fitch - to rank a country investment grade before it will buy its bonds under its 1.5 trillion-euro bond-buying scheme.
In February, DBRS said it was "comfortable" with its BBB (low) 'stable' rating on Portugal.
"It appears that the government is committed to the fiscal programme and there is a healthy dialogue with the European Commission," Fergus McCormick, head sovereign analyst at DBRS, told Reuters.
"Those are two very important elements to our rating and our outlook."
McCormick made his comments before Reuters reported that the European Commission is considering penalising Portugal and Spain for missing budget deficit reduction targets.
He added that a reversal of some austerity measures from the new left-leaning coalition was of concern but reiterated that DBRS had taken a very measured approach to downgrades of euro zone countries in the past.
"Until now, we have been fairly moderate in our downgrades of euro zone countries like Ireland, Portugal, Spain and Italy in particular because we assign more weight to the strong political will to keep the euro zone together."
(Reuters)
