Friday is European ratings day since EU rules took force requiring ratings agencies to say precisely when they will make sovereign pronouncements and to do so outside market hours.
S&P has already shifted its outlook on Portugal’s rating from creditwatch negative to negative. The rating remains at BB, one notch below investment grade. That sounds obscure but it’s actually something of a vote of confidence though probably short of what the market had been hoping for.
The ratings agency said it expects Lisbon to meet its budget deficit target this year based “partly on indications that the economy has been showing signs of stabilization since mid-2013” – another fillip as Lisbon tries to follow Dublin out of the bailout exit door this year.
Portuguese Prime Minister Pedro Passos Coelho will take part in his first parliamentary debate of 2014, after a roaringly successful bond issue last week, which has helped to bring debt yields in the secondary market to their lowest levels since 2010. He is likely to be asked whether the country will need a precautionary loan after the end of the bailout.
Fitch is also out with its verdict on the Netherlands, keeping its AAA rating with a negative outlook. The Dutch have already lost a triple A rating from S&P.
Fitch said public finances had deteriorated but remained within the “tolerance” of a top-notch rating, some relief to the Dutch government although the agency’s forecast of stagnation this year followed by anaemic 1 percent growth in 2015 is hardly cause to put out the bunting.