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LISBON, Nov 3 (Reuters) - Portugal does not expect any credit rating downgrades after parliament last week rejected the 2022 budget bill in a move likely to trigger snap elections, Finance Minister Joao Leao told reporters on Wednesday.
"After the pandemic crisis, Portugal was one of the first countries to have its rating not downgraded, but upgraded," he said, referring to a move by Moody's Investors Service in September.
The same agency warned on Monday, however, that the rejection of the budget was "credit negative" and could hamper the country's ability to tap EU recovery funds.
"We do not expect this risk" of downgrades to materialise, Leao said, adding though that further improvements in credit ratings that the government had been hoping for "will have to wait" until political stability is re-established.
All three top ratings agencies have Portugal two notches into investment grade territory with a stable outlook after lifting it from "junk" status, where Portugal ended up during its 2010-13 debt crisis.
"Portugal is a credible country that has put its public debt on a clear path of reduction... making our financing conditions more favourable than those of countries like Spain, Italy, Greece," Leao said.
The yield of Portuguese 10-year bonds slipped 3 basis points to 0.42% on Monday, compared to 0.51% for Spain. Since last Wednesday, when the budget bill was rejected, the Portuguese yield has risen by only 5 bps.
The budget rejection paves the way for snap elections after six years of relative political stability under the minority Socialist government.
Before taking a final decision on whether to dissolve parliament and hold elections two years ahead of schedule, President Marcelo Rebelo de Sousa will consult his Council of State later in the day. (Reporting by Sergio Goncalves, writing by Andrei Khalip, editing by Nathan Allen and Nick Macfie)