Moody's upgrades Portugal debt rating

Moody's raised the debt rating of Portugal one notch to Ba2Friday and said a further upgrade was possible as the country begins to pull awayfrom its financial crisis."Portugal's fiscal situation has improved more rapidly than initially targeted andthe public debt ratio will start declining this year," Moody's said.A Ba2 rating leaves Portugal in junk bond territory, two notches below investmentgrade.Moody's noted that the country's fiscal deficit had been reduced by one percentagepoint more than expected last year, "indicating the government's strongcommitment to fiscal consolidation."It also pointed to Lisbon's expected graduation within weeks from its three-yearInternational Monetary Fund-European Union bailout program, and that it will notlikely need to lean on the European Stability Mechanism for more protectivesupport after that happens."Portugal has regained access to the public debt markets and in addition thegovernment has built up sizeable cash buffers."Its economic recovery "is gaining momentum, with signs of broadening beyondexports, which continue to perform strongly."Moody's said it has the country now under review for another upgrade, saying thegovernment's creditworthiness "can improve" in the short term.An upgrade would happen if the country manages to bring its public debt ratio, nownear a high 130 percent of gross domestic product, onto "a clear downward path inthe coming years."Earlier Friday Moody's rival Standard & Poor's upgraded the outlook for Portugal'screditworthiness, citing the bailed-out nation's unexpectedly strong economic anddeficit-cutting performance.Standard & Poor's said it had raised the outlook to "stable" from "negative" forPortugal's long-term sovereign debt, which is rated at a junk-bond equivalent BB,and its short-term sovereign debt, which is rated at B.