Thursday, October 20, 2016

ECB praises Portugal but admits that DBRS has the knife and cheese in hand – TVI24

The one day of the decision of the agency of credit rating DBRS on the rating of Portugal, the president of the European Central Bank assumed that if the note down to garbage this will bring complications, since the rules predict that the ECB to stop buying national public debt. Still, Mario Draghi made a point to praise the country.

having Said that, we have to recognize the remarkable progress that has been achieved in Portugal. Of course, there are vulnerabilities that the Government knows very well”.

To the institution that oversees the european banks is of the greatest concern are the restructuring of the debt of enterprise to the excessive bad debt loans in the Uk.

Now before these statements the leader of the ECB spoke about the threat that Portugal runs already this Friday: “If there is a downgrade [downward revision of the rating] debt instruments issued or guaranteed by the Republic of Portugal will be ineligible as collateral for monetary policy operations or for purchases in the Purchases of the Public Sector”.

agency, canadian has the knife and cheese in hand already that is the only one that has Portugal at investment grade. This has allowed the country to benefit from the intense asset purchase programme of the ECB, which amounts to 80,000 million euros per month, which has helped to contain the interest of sovereign debt at acceptable levels (slightly above 3% at 10 years, the term of reference, although the ideal is to be below this level).

In recent weeks, the DBRS has left several warnings to Portugal because of the slow growth and big structural problems that persist, and have even said that Portugal is “trapped in a vicious cycle”. However, the 10 October, the minister of Finance guaranteed that the agency is “fully comfortable” with the rating, after having had a meeting with its leaders.

as for the other three major agencies – Moody’s, Fitch, and Standard&Poor’s – look at Portugal as the “degree speculative”, that is, place it in the trash, not being a good target for investment.

By 15:00, after the statements of Mario Draghi, the rate of the Treasury Bonds of the Portuguese 10-year fell five basis points to 3,14%, the lowest in almost six weeks.

The interest of the debt in this period has fallen significantly in the last two days, with investors to trust that the decision of the DBRS to be positive and also after the presentation of the State Budget for 2017 that has not translated into nervousness in the markets.

In the press conference that followed the meeting of the monetary policy, in which it was decided to keep the rates of interest in the euro area at historically low levels – the president of the ECB said that the beginning of the gradual withdrawal of the monetary stimulus has not been the subject of discussion.

he Left, however, to consider that it is “unlikely that the monetary stimuli cease abruptly”, because “the low interest rates work”.

As to inflation ensured that the ECB will act again, if necessary, to move closer to 2%. The institution continues with the commitment to “maintain a degree of monetary expansion” is appropriate to ensure price stability in the euro zone.

“The GOVERNING Council continues to expect the key interest rates to remain at current or lower levels for an extended period and far beyond the horizon of the net purchases of assets”, reads the communiqué issued after the meeting.

The asset purchase program in the amount of 80 billion euros a month will last until the end of march or even later, if necessary.” In practice, until the entity led by Mario Draghi “consider that there is an adjustment to a sustained trajectory of inflation”.


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