By Patricia Kowsmann 

LISBON -- Ratings agency DBRS Ltd. on Friday affirmed a key credit rating for Portugal, easing fears that the country could soon be faced with a new funding crisis.

Canada-based DBRS confirmed Portugal's sovereign debt rating at BBB with a stable outlook, which is a notch above junk. Its evaluation contrasts with that of Standard & Poor's, Moody's Investors Service and Fitch Ratings, which have put the country's debt in junk territory.

Without at least one investment-grade rating, Portugal would lose access to the European Central Bank's bond-buying program, which has kept funding costs low not only for the country but for its banks and companies as well.

Portugal, which left a EUR78 billion ($88 billion) international bailout program nearly two years ago, would be required to request a new bailout to get a chance to re-enter the ECB program.

In a statement, DBRS said its rating "reflects Portugal's eurozone membership, favorable public debt maturity structure and reduced vulnerabilities" given the country's budget deficit has fallen from close to 10% of gross domestic product in 2010 to 3% last year, excluding a capital injection into a failed lender.

"However, Portugal faces significant challenges, including elevated levels of public sector debt, ongoing fiscal pressures, low potential growth, and high corporate sector indebtedness," it added.

Its next review of Portugal is scheduled for Oct. 21.

Despite cutting its budget deficit sharply and undergoing labor reforms to make its exports more competitive, Portugal continues to struggle with a high debt load and low growth.

The International Monetary Fund predicted recently that Portugal's economy would grow an average of 1.3% a year over the next six years, too slowly to reduce a debt burden that stands at 129% of GDP.

Portugal's perception among investors has also been hit by two bank failures since 2014 and the election of a Socialist-led government that promised to ease austerity.

Write to Patricia Kowsmann at patricia.kowsmann@wsj.com

(END) Dow Jones Newswires

April 29, 2016 12:58 ET (16:58 GMT)