S&P acts on two Portuguese banks

S&P said it boosted Banco Comercial Portugues SA’s long-term issuer ratings to BBB- from BB+ with a stable outlook and revised the outlook for Banco Santander Totta SA to positive stable and affirmed its BBB+ ratings.

“We revised the outlook on Portugal to positive to reflect its improving budgetary and external positions. Supported by tourism and investments under large EU funds, as well as prudent policymaking, the government's fiscal policy will see net debt to GDP decline to an expected 87% at year-end 2026 from 107% at year-end 2022--one of the steepest reductions in Europe. At the same time, Portugal's overall external position continues to improve, thanks to contained import growth and booming tourism. We therefore expect the current account balance will return to surplus in 2023, at just over 1% of GDP,” S&P said in a statement.

Additionally, it said it forecasts the country’s economy to probably grow 2.5% in 2023.

The positive outlook for Banco Santander Totta reflects the positive outlook on Portugal, the agency said.

“The upgrade reflects that Banco Comercial Portugues SA (BCP)'s creditworthiness has gradually improved in absolute terms and relative to peers due to a combination of internal capital generation and extraordinary measures. These include deferred tax asset reductions, the sale of corporate restructuring funds, securitizations, and lowering the value of its stake in its insurance subsidiary. Capitalization is now neutral to the ratings,” S&P said.

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