Portugal Bears Brunt of Greek Contagion
Poor Portugal. The country’s bonds have borne the brunt of investor frustration over Greece’s failure to reach an accord with private bondholders on writing down the value of their debt.
The yield on Portugal’s 10-year bond soared yesterday with investors concerned that it too would impose losses on holders of Portuguese debt in a restructuring.
I asked Prime Minister Pedro Passos Coelho last night after the European Union summit if Portugal would ever impose losses on its bondholders. He said it wouldn’t for a couple of reasons, citing first the EU’s statement last night that Greek situation is “exceptional and unique” and insisting that Portugal’s debt is sustainable.
It’s certainly lower than Greece’s. In its autumn economic forecast the European Commission projected that Portugal’s total debt will rise to 111% of GDP this year, compared to 198.3% for Greece, not taking into account bondholder write offs now being negotiated.
http://go.bloomberg.com/euro-crisis/2012/01/31/portugal-bears-brunt-of-greek-contagion/
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