S&P affirms Portugal

Standard & Poor's said it affirmed its unsolicited BB/B long- and short-term foreign and local currency sovereign credit ratings on the Republic of Portugal.

The outlook is stable.

S&P said the ratings are supported by Portugal's relatively prosperous economy compared with peers, expenditure-led budgetary consolidation, improved government debt maturity profile and execution of important reforms.

The ratings remain constrained by what the agency considers to be very high private and public sector debt, a weak external economic balance sheet and a weak monetary transmission mechanism that appears to prevent parts of Portugal's corporate sector from further improvement in cost competitiveness, coupled with deflationary pressures.

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