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Portugal out of junk status – and markets jump

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Portugal has had its debt rating upgraded to investment level after five years as junk status.

The move by Standard & Poor’s gave the country’s stock market a boost, with the Lisbon exchange rising by more than 1% on Monday in early trading.

The yield on Portugal’s 10-year bond dropped 0.29 percentage points – an unusually large one-day increase – to 2.49%, the lowest level since January 2016.
S&P raised the country’s rating from BB+, or junk status, to BBB-, the lowest investment grade mark, with a stable outlook.
It said that Portugal had made “solid progress” in restoring its financial health since needing a €78bn (£69bn) bailout in 2011 amid the height of the eurozone crisis.

Its economy has been gradually recovering from a deep recession thanks in part to an increase in exports, and the country expects the economy to grow 2.5% this year.
“The ratings upgrade is a move we agree with – it is clear that the economy has recovered significantly and progress made by policy makers has been beneficial to the recovery,” said Peter Chatwell, head of euro rates strategy, at Mizuho International in London.
Portugal is still rated as junk by the other two main ratings firms, Fitch and Moody’s.
With the exception of Greece, which is still in a bailout programme, and Cyprus, all eurozone member states are rated investment grade by at least one of the three ratings agencies.

Source: SKY