Standard & Poor's (S&P) has raised its outlook in Portugal's sovereign debt rating to 'stable' from 'negative', causing the country's bond yields to slide on Thursday morning.

The move was due to expectations that European authorities will lengthen the maturity date on its loans and that the Troika (representatives from the European Commission, International Monetary Fund and European Central Bank) will ease conditions due to the weak state of the Portuguese economy.

"The stable outlook balances our view of Portugal's near-term fiscal and economic challenges against continued multilateral support and our view of the government's strong commitment to reform," the agency said.

S&P maintained its current rating of "BB/B".

On the secondary debt market, the yield on Portugal's 10-year bond was down eight basis points on the day at 6.07%. This compares with the near-14% levels seen at the same time last year.

JM

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