Financial Communique » Portugal

Portugal, IMF and EU agreed on 78 billion EUR rescue loan

Viliyana Filipova — Thu, 05 May 2011 14:32:19 +0000

Portugal finally reached an agreement with the European Union and International Monetary Fund (IMF) rescue package of 78 billion euros, confirmed the three negotiating parties said on Tuesday. The program lays the foundations for strengthening of the Portuguese economy, said the Head of Mission of the European Commission Jurgen Kroger. The EU will participate in a package of 52 billion euros, and the IMF – with 26 billion euros. The conditions of bail include loan acceleration and deepening of the ongoing privatization program, and significant structural reforms, said Finance Minister Teixeira dos Santos Fenrnandu. The agreed financial assistance program is tough, but necessary and fair, “said Kroger, said. Portugal is going to recession two years, the plan provides support for a contraction of about 2 percent in 2011 and 2012, before the boom in 2013, predicted Fenrnandu Teixeira dos Santos. The economic recovery after two years will be based on exports, “he told reporters. In 2010 Portugal reported growth of 1.4 percent after a year of recession in 2009 due to financial crisis. The unemployment is expected to increase to 13 percent in 2013, and in the coming years to begin to decline, said the Minister. Dos Santos presented this morning program for financial assistance to Portugal for three years worth 78 billion euros. This amount will allow you to cover the funding needs of the country that have been carefully studied before to reach agreement on that amount, said Finance Minister.
In Brussels, the European Commissioner for Economic and Monetary Affairs Commissioner Olli Rehn and IMF Managing Director Dominique Strauss-Kahn issued a joint communique, which stated that financial assistance to Portugal will require a “genuine national effort.”
“The Portuguese economy is facing challenges,” they noted, highlighting its strong support in the authorities’ efforts to protect the most vulnerable.

Moody’s may decrease the Portugal’s credit rating with 2 stages

Viliyana Filipova — Sun, 02 May 2010 11:28:42 +0000

The International rating agency Moody’s will review over the next three months the credit rating of Portugal with a possible decrease in the direction of one or two degrees, said in a statement the agency, quoted by RIA Novosti. Now Portugal’s credit rating is “Aa2″. The intention of Moody’s is continuing to assess the situation to deteriorate to government debt. In the view of analysts from the rating agency, taking into account the small size of the economy of Portugal and its poor growth performance of these public debt may not fully reflect the rating of “Aa2″. At the end of April ratings agency Standard & Poor’s lowered the long-term credit rating of Portugal with two degrees – from “A +” to “A-” to “negative” outlook. At the end of 2009 government debt of Portugal was up nearly 77 percent of gross domestic product (GDP) of the country, for comparison, the external debt of Greece has 120% of GDP. Meanwhile, analysts note that in Portugal the threat can come from many large private sector debt, which exceeded the indicator for Greece. According to forecasts by the European Commission (EC) GDP growth this year Portugal will be 0.5 percent and for 2011 – 0.7%.
At the same time, public debt will continue to increase, says the EC, at the end of 2010 will be approximately 86% of GDP at the end of 2011 will reach 91 percent of GDP.

Markets tighten noose around Portugal

Viliyana Filipova — Tue, 02 Feb 2010 22:02:35 +0000

Trade in the market for bankruptcy protection under state or contracts for protection against non-performing its obligations (credit default swaps), today passed more calmly than last week, police MarketWatch. Against this background, risk premiums of almost all countries decreased due to a narrowed and the defense costs of unserved. This happens with Spain and Greece, which last week were monitored under a magnifying glass by market participants. Not such a situation, however, with Portugal as the country risk premium went up again. According to the CMA DataVision, which provides data on the cost of credit swaps, the primary risk indicator for Greece is back below the 4 per cent and 3.97 per cent. This means that to protect the position of EUR 10 million in state bonds to Greece need to pay a premium of 397 thousand euros per year. In Spain also observed shrinkage of the risk spread, and he is now 1.61 percentage points. Although the overall stabilization of the situation, however, Portugal remained under strong pressure from the market. The country risk premium is increased to 2.34 percent from 2.27 percent on Friday.
Swaps for protection against non-performing obligations are traded on unregulated derivatives market like. Their function is to be marketed as insurance in case of suspension of payments on a bond issue. In case the issuer stops paying its obligations, the buyer gets suspend payments from the counterparty to the derivative transaction, or its vendors.