But the scope of this decision goes deeper. It instills more confidence in the market to acquire or hold Portuguese public debt, potentially at a lower relative cost. And it’s not just the Treasury that benefits.
The improved rating has effects on the entirety of Portuguese economic agents, as the country is perceived as less risky, impacting credit and evaluation models.
With this decision, Moody’s ultimately puts Portuguese debt on the radar of more investors, as highlighted by the Ministry of Finance in a statement.
“It allows more investors to be creditors of Portugal, as there are many funds, insurers, and investment banks with strict rules on investing in sovereign debt, focusing only on bonds with an A rating,” explained Vítor Madeira.
In practical terms, it will also bring benefits to the economy, translating into “lower interest rates for the State, companies, and families, which is always important, but even more crucial in the context of a high-interest rate policy by the ECB,” stated Finance Minister Fernando Medina shortly after the decision was announced.
