Morningstar DBRS Affirms Top Ratings for Switzerland, EFSF, ESM; Portugal Confirmed at A (High)

By / / Breaking News

Key Takeaways

  • Morningstar DBRS has reaffirmed the AAA long-term issuer ratings for Switzerland, the European Financial Stability Facility (EFSF), and the European Stability Mechanism (ESM), all with a Stable Trend.
  • Portugal's long-term issuer rating has been confirmed at A (High), also with a Stable Trend, reflecting its strong fiscal performance and economic resilience.
  • The confirmations for Switzerland, EFSF, and ESM underscore their robust financial fundamentals and strong institutional support amidst a challenging global environment.
  • Portugal's rating confirmation highlights its significant public debt reduction and commitment to fiscal surpluses, positioning it as a reliable investment destination.

Morningstar DBRS has announced the confirmation of several key sovereign and supranational credit ratings, reinforcing stability in the European financial landscape. Switzerland, the European Financial Stability Facility (EFSF), and the European Stability Mechanism (ESM) have all maintained their prestigious AAA long-term issuer ratings with a Stable Trend. This decision reflects their enduring credit strengths and the ongoing commitment of their respective guarantors and member states.

For Switzerland, the reaffirmed AAA rating with a Stable Trend is underpinned by its wealthy and diversified economy, sound public finances, and a solid external position. Morningstar DBRS noted that Switzerland's prudent fiscal policy, supported by its debt brake rule and a low public debt level of 37.6% of GDP in 2024, provides ample room to mitigate potential economic shocks. Despite revised downward real GDP growth forecasts for 2025 and 2026, strong institutions and predictable policies continue to solidify Switzerland's status as a safe haven for investors.

The European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM) also saw their long-term issuer ratings confirmed at AAA with a Stable Trend. These ratings are fully reliant on their Support Assessment, reflecting the unconditional and irrevocable guarantees from Euro area member states and the strong commitment to support these institutions. The ESM's credit ratings are further supported by its very high capitalization, effective and diversified funding, and its role as a financial backstop for Euro area sovereigns. Similarly, the EFSF's robust guarantee structure and the cohesion among Euro area member states are crucial factors.

Portugal's long-term foreign and local currency issuer ratings were confirmed at A (High), with a Stable Trend. This confirmation signals Morningstar DBRS's view that risks to Portugal's credit ratings are balanced. The country's economic growth and fiscal balance are expected to outperform the eurozone average over the next two years. Portugal's public debt ratio significantly declined from 116.1% of GDP in 2019 to 94.9% in 2024 and is projected to fall below 90.0% of GDP within the next two years, driven by high primary surpluses and nominal output growth. The government's commitment to generating small fiscal surpluses further reinforces investor confidence.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. We are not financial professionals. The authors and/or site operators may hold positions in the companies or assets mentioned. Always do your own research before making financial decisions.
Scroll to Top