Portugal

Shares in Banco Espírito Santo led declines after media reports that Espírito Santo International, which owns part of Espírito Santo Financial Group, which in turn owns a large stake in BES, had delayed coupon payments on some of its short-term debt, The Wall Street Journal reported. "Last week some clients were asked to swap the commercial paper into equity," RBS credit strategist Alberto Gallo wrote in a note.

Securities regulators in Portugal and Britain have temporarily banned short-selling in Banco Espírito Santo after the Portuguese lender’s stock fell more than 16 percent on Monday on fears about its corporate parent, the International New York Times DealBook blog reported. Late Monday, the Comissão do Mercado de Valores Mobiliários of Portugal suspended short-selling in Banco Espírito Santo and in the Espírito Santo Financial Group, which owns about a quarter of the bank’s stock. The Financial Conduct Authority of Britain followed suit on Tuesday.

Portugal has taken the unusual step of sacrificing a €2.6bn loan payment to avoid being rushed into drawing up alternatives to budget measures overturned by the country’s constitutional court, the Financial Times reported. Lisbon’s official lenders had set a deadline of June 30 for the government to devise other ways of saving an estimated €500m-€800m this year to offset the budget cuts that the court ruled to have breached the constitution.

Portugal’s lenders cannot pay the last tranche of the country’s bailout until a rejection by the supreme court of a series of austerity measures is resolved, prime minister Pedro Passos Coelho said today, the Irish Times reported. Mr Passos Coelho said that although the bailout had formally ended the last payment depended on conditions that had been signed off by the lenders, the International Monetary Fund and the European Union. “As there was a change in these conditions, now evidently this payment can only take place when this situation is overcome,” he said.

Portugal's central bank issued a resounding warning Thursday to the government and banks that while the country has successfully exited a €78 billion ($106.6 billion) bailout program, much more needs to be done to put the economy on the right track, The Wall Street Journal reported. The Bank of Portugal's warning came hours after the country's statistics agency said the economy had contracted 0.7% in the first quarter of the year from the previous three months, as exports slowed.

Europe’s climb out of its debt crisis has been narrated by a long debate on whether the austerity imposed on countries that needed international bailouts would bring more pain than relief. Portugal’s move to exit its bailout gives new ammunition to the austerity advocates who have called for shredding European-style social safety nets that in many countries no longer seem affordable, the International New York Times reported in an analysis.

Portugal on Sunday announced its exit from a three-year bailout program that has forced deep spending cuts and set off mass protests — but has also helped the country clean up its public finances and return to the bond markets after halving its budget deficit, the International New York Times reported. Prime Minister Pedro Passos Coelho said that Portugal had built up sufficient financial reserves to end the program on schedule and without requesting any additional line of credit from its European counterparts.

Portugal plans to implement budget measures worth 1.4 billion euros ($1.94 billion) to narrow its budget deficit and meet a target set for 2015, Bloomberg News reported. The measures represent about 0.8 percent of gross domestic product and include cutting costs at government ministries and reducing the number of public sector workers through retirement and agreements to end employment contracts, Finance Minister Maria Luis Albuquerque said in Lisbon today. The government will continue to charge an extraordinary contribution on energy companies in 2015.

Portugal's international creditors have put off paying out the remainder of the country's bailout until late June, allowing euro-zone countries to avoid having to decide whether to extend another lifeline before Europe-wide elections, The Wall Street Journal reported. The delay frees up European finance ministers to focus on Greece when they meet in Athens on Tuesday and Wednesday. They are expected to sign off on paying the remainder of Greece's euro-zone bailout, some €10.1 billion ($13.9 billion), over the next few months.

Portugal is jostling to be next in line to perform the periphery escape trick, the Financial Times reported. After the country’s 10-year government bond yields fell below 5 per cent for the first time in more than three years last week, Lisbon officials have begun openly to entertain the possibility of emulating Ireland’s “clean exit” from its three-year rescue programme.