Portugal

Investors facing huge losses on Novo Banco SA bonds suffered another defeat, Bloomberg News reported. The group that oversees the credit-default swaps market declined to amend any contracts insuring the Portuguese bank’s debt, probably killing off swapholders’ last chance of getting a payout following the transfer of about 2 billion euros ($2.2 billion) of bonds to a bad bank. All committee members voted against changes, the International Swaps & Derivatives Association said in a release on Wednesday.

The European Commission approved Portugal’s 2016 draft budget yesterday after the new Socialist government promised to hike indirect taxes to meet EU budget rules while also easing austerity to keep its leftist allies happy, the Irish Times reported. The decision by the commission will come as a relief to Portugal’s government, which was able to maintain most of its initial budget promises, such as hiking civil servants’ wages and raising the minimum wage, but had to lower its economic growth outlook.

Portugal’s new Socialist government faces an embarrassing rejection of its first “anti-austerity” budget by the European Commission on Friday as eleventh-hour talks failed to break a stalemate over additional cuts needed to bring Lisbon in line with EU deficit rules, the Financial Times reported. Portuguese officials expressed confidence they would overcome objections from the commission, which last week warned Lisbon it risked “serious non-compliance” with the bloc’s fiscal rules.

The European Commission on Wednesday raised questions about Portugal’s budget plan for this year, a move that could put pressure on the government to soften its antiausterity agenda, The Wall Street Journal reported. In a letter dated Jan. 26 and addressed to Portuguese Finance Minister Mario Centeno, the European Union’s executive arm said the budget plan sent to Brussels last week envisioned a structural deficit of 1.1% of gross domestic product this year, which is more than recommended by the commission.

Portugal’s newly appointed Socialist government said Friday that it will reverse public wage cuts and lower some taxes this year, but it will still manage to cut the country’s budget deficit by increasing other taxes and projecting higher economic growth, The Wall Street Journal reported. Finance Minister Mario Centeno said in a press conference that he sees the economy growing 2.1% this year, above the 1.7% projected by the European Commission in November of last year.

Portugal’s central bank has offered to partly compensate Novo Banco bondholders who lost money when their securities were transferred to a “bad bank” last month in a bid to ease tensions with the government and furious international investors, the Financial Times reported. The move is seen as an attempt to repair reputational damage caused by losses suffered on almost €2bn of bonds which provoked threats of lawsuits.

Portugal faces fresh concerns relating to one of its smaller banks after shares in Banif tumbled Monday amid concerns about its ability to pay back loans it received in a bailout of the country’s banking sector, the International New York Times reported. Banif was one of the smaller banks to receive emergency lending as part of the international bailout of 78 billion euros, or $85.7 billion, that Portugal negotiated in 2011.

Last month’s elections in Portugal were meant to deliver a clear verdict on the center-right coalition of Prime Minister Pedro Passos Coelho, whose austerity program has been held up as a model by creditors and countries like Germany that have advocated belt-tightening in Europe, the International New York Times reported.

Just a few weeks ago, voters appeared ready to punish Prime Minister Pedro Passos Coelho for spending cuts and tax increases that drove Western Europe’s poorest country deeper into a recession to save it from insolvency, The Wall Street Journal reported. But with the economy on a slow mend, a late surge of support in opinion polls has vaulted the conservative leader several points ahead of his Socialist rival, making him the favorite in an election on Sunday that is viewed as a test case for the troubled eurozone. In the four years since Mr.

Portugal is having trouble selling the bank salvaged from the wreckage of one of the country’s biggest private lenders, the International New York Times reported. The Portuguese central bank on Tuesday missed its own deadline for selling the salvaged entity, Novo Banco, after talks with the front-running bidder faltered. The Bank of Portugal did not identify the bidder, but it has been widely reported to be a Chinese insurance and asset management company.