Portugal

Klaus Regling, the chief executive of the European Financial Stability Facility (EFSF), has said he does not expect Portugal or Spain to ask for bailouts, the Irish Times reported on an Austrian state radio ORF story. “At the moment it looks like Ireland will be the only country to have tapped the EFSF,” Mr Regling said. “I don’t see any need at all any more for Spain” to take money, he said, adding that “Portugal still has to do some work”. While the EFSF would have sufficient funds for additional bailouts, giving funds “currently doesn’t look necessary”, he said.

Portugal's plan to cut its budget deficit could be hurt by a rise in oil prices and raw materials, but the government is ready to launch new austerity measures to stay on track, Finance Minister Fernando Teixeira dos Santos said Monday, The Wall Street Journal reported. "We have correction mechanisms that will allow us to meet the targets we have set," Mr. Teixeira dos Santos said at a Reuters-Radio TSF conference in Lisbon.

Portugal is under increasing pressure to take a bail-out as its borrowing costs have stayed above a level widely considered unsustainable for longer than Greece and Ireland before their rescues last year, the Financial Times reported. Portugal’s benchmark market interest rates were above 7 per cent for the 16th consecutive trading day on Friday, closing at 7.55 per cent. Greece and Ireland, the two eurozone countries to seek bail-outs so far, lasted 13 and 15 trading days respectively with bond yields of more than 7 per cent.

Some European officials are quietly discussing contingencies for what might be a Portuguese request for financial aid as early as next month, when the highly indebted country begins facing large-scale debt redemptions, The Wall Street Journal reported. Financial pressure on the country's treasury is increasing, a topic that is likely to come up at the March 11 and March 24 meetings of European Union leaders, according to people familiar with the discussions. Portugal has raised €4.75 billion ($6.5 billion) via bond sales so far this year.

The European Central Bank has intervened in eurozone bond markets for the first time in weeks, buying Portuguese debt amid fears that the country could yet seek an international rescue, the Financial Times reported. The ECB returned to the market on Thursday as Portugal’s cost of borrowing on 10-year debt jumped to a euro-era high of 7.63 per cent, traders said. The ECB temporarily suspended its bond-buying programme in mid-January.

The euro zone's debt crisis is entering a new phase after a brief Christmas lull as Portugal struggles to persuade investors to buy its bonds and other European governments step up pressure on the country to seek an international bailout, The Wall Street Journal reported. Portugal hopes to raise new funds in a bond auction on Wednesday, despite a market sell-off in recent days that pushed the interest yield on Portuguese 10-year bonds above 7% Friday, the highest level since the euro's creation.

Fitch Ratings cut its rating on Portugal, citing concerns about a "deteriorating near-term economic outlook" and a "much more difficult financing environment" for the European nation's government and banks, the Wall Street Journal reported on Friday. The ratings agency also kept its ratings outlook negative, meaning future downgrades are possible, as it warned that additional measures might be needed to realize the government's deficit-reduction targets.

Moody's Investors Service warned it may lower Portugal's credit rating by as much as two notches, dealing another blow to investor confidence in the euro zone, the Wall Street Journal reported today. Moody's warning came less than a week after the ratings agency said that it may downgrade its ratings on Spanish government debt. In putting Portugal's A1 long term and Prime-1 short-term government bond ratings on review, Moody's cited uncertainties over the longer-term health of Portugal's economy, which could suffer from the government's fiscal austerity plans.

As Dublin moves begrudgingly toward accepting a European Union bailout, attention is rapidly shifting to Portugal, the country perceived to be as weak a link in the euro zone as Ireland, though for different reasons, the International Herald Tribune reported. While Portugal’s leaders, like Ireland’s, insist that they have enough money for now and are making brave and necessary cuts to government spending, in fact the Portuguese government is both divided and stalemated.

Concerns over the financial stability of countries on the euro-zone's fringe mounted Monday as one of Ireland's largest banks had its credit rating cut and political tensions fueled doubts about Portugal's deficit-cutting plans, The Wall Street Journal reported. Moody's Investors Service downgraded the senior debt of Anglo Irish Bank Corp. by three notches to Baa3. Ireland's property-market collapse has crippled its banks, and the government has so far spent €33 billion ($44.5 billion), about one-fifth of its gross domestic product, rescuing them.