LISBON, April 20 (Xinhua) -- The DBRS ratings agency moved Portugal up a notch on the investment grade scale on Friday, but Moody's kept Portugal in the junk bracket.
Moody's had been expected to become the third of the "Big Three" ratings agencies to remove Portugal's junk label. Standard & Poor's reinstated Portugal to investment grade in September 2017 and Fitch followed suit in December.
But Moody's issued no revision, meaning that it still ranks Portugal's debt as "Ba1", one level below investment grade.
Had Moody's promoted Portugal, the country's debt would have been ranked investment grade by all the major ratings agencies for the first time since 2011, a year when Portugal requested a 78 billion euro bailout package from the European Union and International Monetary Fund.
The DBRS trod a different course to the "Big Three", never downgrading Portugal to junk. On Friday it raised Portugal one notch, from "BBB low", its lowest investment grade ranking, to "BBB", its second lowest, while maintaining a stable outlook.
The European Central Bank recognizes DBRS ratings and so throughout Portugal's economic crisis it qualified for the ECB's sovereign debt purchase program.
But some institutional investors, including sovereign wealth and pension funds, can only buy debt that's rated investment grade by Moody's, Fitch and S&P. An upgrade from Moody's would thus have widened Portugal's investor pool and brought borrowing costs down.
Yields on Portugal's benchmark 10-year bond hit 3-year lows in Friday trading in anticipation of a Moody's upgrade. With it having failed to materialize, yields can be expected to correct higher when European markets reopen on Monday, despite the DBRS boost.