Portuguese banks will benefit from the real estate market conditions, and the rising prices are "credit positive" according to Moody's.
According to the rating agency, the “improving real-estate market conditions in Portugal are credit positive” for the Portuguese banking system and for the Portuguese financial system at once.
The analysts at Moody’s noted that the rising prices are credit positive and expect inflation of house prices to continue over the next 12 to 18 months. They also noted sharp increases in certain areas that are “far stronger than the national trend”. The agency believes that high foreign investment in the real estate market together with better macroeconomic conditions have improved the country’s real-estate market.
Additionally, the rising prices will be positive for covered bonds, RMBS and NPL deals as they “limit the losses in the underlying mortgage loans if borrowers default and properties have to be sold to recover unpaid debt”.
They also noted, again, that the sale of NPL portfolios and its subsequent decline (although NPL volume is still high compared with other European banking systems) has substantially helped the Portuguese banking system.
