Investing.com - Financial Markets Worldwide

Portugal: An EU Risk Factor

ByDanske Markets
Published 09/20/2013, 06:47 AM
Updated 05/14/2017, 06:45 AM

Portugal needs to return to the market or get further assistance in 2014. A solution must be found well before June 2014 when there is a funding gap of EUR6bn.

Initial steps towards a return to the market have been taken but increased uncertainty about the government's ability to undertake necessary reforms has sent spreads higher and reduced the chances of a successful return any time soon.

However, if this fails, we are confident the EU will first improve the terms of existing funding and, if needed, also provide new loans. In our view, it would be wise for politicians not to test whether the debt crisis is still contagious.

The risk is that Portugal fails to show commitment to reforms and meets a closed door in Brussels. This has become more likely due to political resistance and constitutional rejections of austerity measures. However, we see the risk as small.

We could see government spread widening for some time but we do not expect a debt restructuring or default. Allowing Portugal more time is likely to result in an improved economic situation, while debt could start to decline. In our main scenario, the debt ratio peaks at 125.5% of GDP in 2014.

To Read the Entire Report Please Click on the pdf File Below.

Latest comments

Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.