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Portugal holds on to DBRS investment grade rating, keeps QE access

DBRSmaintained its investment graderating on Portugal's sovereign debt April 29, preserving thecountry's access to the ECB'squantitative easing program.

DBRS,the last agency to class Portugal above junk, kept its long-term issuer ratingat BBB (low) and maintained its stable outlook, it said in a news release.

"Therating reflects Portugal's Eurozone membership, favorable public debt maturitystructure, and reduced vulnerabilities, following a substantial correction ofthe current account deficit over the past few years," the agency said. "However,Portugal faces significant challenges, including elevated levels of publicsector debt, ongoing fiscal pressures, low potential growth, and high corporatesector indebtedness."

Otherrating agencies, including S&P Global Market Intelligence's sister company,Standard & Poor's Ratings Services, have marked down Portugal's debt tojunk. This fueled speculation that DBRS might follow suit.

Countriesmust have their debt rated at investment grade by at least one of the rating agenciesin order to have access to the ECB's bond-buying program.

TheECB's requirement for QE eligibility had no influence on DBRS' decision, FergusMcCormick, head of sovereign ratings at the agency, said in an interview.

"The collateral policies of the ECB are the ECB'sdecision alone,"he said, adding: "It does happen to be a factor of critical importance forPortugal that it remains eligible for quantitative easing."

Itis also vital that Portugal continues its path of structural reform, he said.

DBRS'next ratings review will take place in October.