Ratings agency Standard & Poor's sees Portugal's economic fortunes improving, as the debt-laden eurozone country will receive more support from its lenders. But despite the upgrade, Portugal bonds still have junk status.
Portugal's overall risk rating remained at BB, international ratings agency Standard & Poor's (S&P) said in a statement issued late Wednesday, but the outlook for the debt of the crisis-hit country had been changed from negative to stable.
S&P said the reason for the upgrade was willingness by Portugal's international lenders - the European Union, the International Monetary Fund (IMF) and the European Central Bank (ECB) - to give the country more time to pay back its bailout loans.
In 2012, S&P lowered Portugal's debt rating to BB, which is two levels below investment grade, after the country's economic woes mounted in the wake of a 2011 bailout worth 78 billion euros ($101 billion).
Praise from Brussels
On Monday, eurozone finance ministers at their meeting in Brussels praised Lisbon for its strong commitment to the adjustment program, which they said had been successfully addressing the country's deficit problem.
They urged the international lenders of both Portugal and Ireland to work out options for extending loan maturities in order to smooth the debt redemption payments for the two countries.
S&P said the improved debt rating for Portugal was solely based on the European financial support and wouldn't reflect the country's economic situation.
Portugal's economy is expected to contract by 1.9 percent this year in what's been perceived to be the deepest recession since the 1970s. Unemployment hit an all-time high at the end of 2012 with a rate of 17 percent.
uhe/slk (dpa, Reuters)