Monday, January 30, 2012

Portugal debt status worsens

   Portugal's debt status worsened as underwriters raised the cost of insuring its bonds to new highs. Both business and consumer confidence hit new lows.
   Consumers in particular were hard hit by painful austerity measures. Banks offering insurance to holders of Portuguese debts have been demanding  very large payments when a contract is signed rather than spreading the cost over the period of the contract. Portugal is now second to Greece in the amount required to insure its debt.
   Standard and Poor's rates Portuguese bonds a "junk"status. The yield on Portuguese ten year bonds has risen to just under 16 per cent. This is over twice the rate that is considered sustainable. This is just another sign that Portugal will require another multi-billion dollar bailout from the EU and IMF. It already received 78 billion euros earlier. For more see this BNN article.

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