EthiFinance Ratings, the European credit rating agency, has affirmed the rating of the Kingdom of Spain at “A-” with a stable outlook, supported by its most recent exhaustive analysis of the country’s economic and financial situation.

This credit rating confirmation comes from the positive GDP growth outlook for 2023, estimated to reach 2.4%, and on the downward trend in inflation, which remains at 3.4%, although still above the long-term inflation target set by the central bank.

It is noteworthy that Spain’s public debt has decreased to 109.8% of GDP at the close of the third quarter of 2023, while in terms of the cost of debt, a significant rebound in the average cost has been observed to 2.08%, exceeding the 1.64% recorded in 2021.

In any case, EthiFinance Ratings also highlights the persistence of downside risks that could affect the Kingdom of Spain’s credit rating going forward. These risks include worsening geopolitical risks in Europe and the Middle East, which could impact inflation correction and monetary policy; a deeper-than-projected economic slowdown; continued high interest rates, which would hinder access to financing; and parliamentary fragmentation in Spain that could complicate the legislature.

Documents

• 240122_PR_KingdomSpainJan24_Eng.pdf

In accordance with Regulation (EC) No. 1060/2009 of the European Parliament and of the Council, EthiFinance Ratings published in the month of December 2023 the Sovereign Rating Calendar for 2024, you will find the calendar here.

Related content

• Sovereign Ratings Calendar_EN_2024 (1).pdf
  

EthiFinance Ratings has affirmed the BBB+ rating with a stable trend to the Republic of Portugal. The rating agency’s assessment reflects the country’s rapid economic recovery seen in 2021 and 2022, which in 2023 has persisted at a more moderate pace.

The rating also considers the positive impact of the NGEU Funds on medium-term growth potential, although it highlights the need to address public debt, which still remains at high levels.

Similarly, it highlights that the Portuguese economy has strengthened its post-COVID-19 recovery, with a +6.9% y-o-y growth in 2022 and reaching pre-pandemic GDP levels. Furthermore, it notes that despite a robust start to the year in 2023, domestic demand and tourism experienced a slowdown in the second and third quarters due to inflation, tighter financing conditions, and weakness in the economies of its major trading partners.

Related content

• 231117 – NdP EthiFinance Ratings Portugal_ENG.pdf

We have published on our website a new version of our Long-Term Corporate Rating Methodology, introducing non-material changes to the analytical framework while preserving the core of its original methodological criteria.  Additionally, a new annex (Annex “I”) addresses our approach to rating Hotels which replaces our specific Hotel Sector Methodology.

Response to comments related to the Sovereign Rating Methodology.

Documents

• Response to comments related to the Sovereign rating methodology

EthiFinance Ratings has affirmed Spain’s unsolicited credit rating at “A-” with a stable trend. The assessment, performed at the second annual review, reflects the agency’s perception of the country’s risk profile, which remains stable according to its rating methodology.

Documents

• 230727 PR EthiFinance Ratings Spanish Economy.pdf

EthiFinance has launched its new Project Finance Methodology, entering into effect today, 21st of July, 2023.  Material changes have been made to improve and clarify our Project Finance Framework.  As a novelty, we have included ESG considerations in our Criteria and have added Physical Risks as a new rating factor.

Documents

• CRA_128_V2.Project_Finance_Methodology.pdf

The Request for Comments period was launched on the 8th of June 2023 and was closed on 8th of July of 2023.

The Request for Comments affected the future EthiFinance Ratings’ Sovereign Methodology. During this period we have received a comment that will be answered publicly in the coming days.

EthiFinance Ratings is launching a request for comments for its Sovereign Long-Term Rating methodology and is inviting market participants to submit their comments and suggestions.

The Request for Comments period is starting on 8th of June and is expected to last until 8thl of July. Unless specified otherwise, these comments will be considered as public. Comments should be submitted at the following email address: rfc@ethifinance.com. The final version is expected to be published and implemented in Q3 2023.

This proposed methodology is based on a combination of qualitative and quantitative factors through an expert-based model approach. More specifically, our methodology relies on the determination of an anchor rating through the use of a partial least squares model combined with variable importance projection (PLS-VIP) that takes into account, for each sovereign, a set of key performance indicators (KPIs) distributed across three pillars and eight sub-pillars. In a second step, we apply a series of qualitative adjustments to the anchor rating for each of the sub-pillars to include in the analytical process all those qualitative factors that are not part of the model.

In its May review, EthiFinance Ratings upgrades the Republic of Portugal’s unsolicited credit rating from BBB to BBB+ with a Stable outlook. The European rating agency considers that the Portuguese economy will grow by 2.7% this year, according to the European Commission’s forecasts. This rating improvement is based on the “rapid” economic recovery during 2021 and 2022, as well as on the correction of certain imbalances in public finances and the financial system consolidation carried out last years. It also emphasizes the favorable evolution of the Portuguese labor market, which last year reduced its unemployment rate to 6% of the active population, seven tenths of a percentage point less than at the end of 2021. However, the rating is limited by the high level of public debt which, despite the downward trend observed in recent years, will be above 110% at the end of this fiscal year 2023.