Portugal Foreclosures and Bankruptcies: A Closer Look

In this commentary, DBRS Morningstar analyses some key metrics related to the evolution of foreclosures and bankruptcies in Portugal over the last few years. Summary highlights include:

-- Since 2018, the number of closed foreclosure processes has been declining in Portugal, while the average duration has been steadily increasing.

-- Despite a decrease in the number of new bankruptcy declarations observed since 2015, latest data shows that a reversal started taking shape late-2022 onwards. At the same time, the average timing to resolve bankruptcy processes is currently at its all-time high and could further increase if the observed reversal is confirmed.

“For NPL securitisations where a number of loans are under legal proceedings, increased legal timings coupled with an accumulation of pending cases at courts would lead to more volatile and lengthier note repayment. This will most likely affect future business plans for new transactions and, as shown by DBRS Morningstar-rated NPL securitisations in Portugal, reliance on extra-judicial solutions will be key for good performance”, stated Vassilis Panaghoulis, Assistant Vice President in DBRS Morningstar’s European NPL team.