Portugal pays higher rate to raise 1bn euros Skip to main content

Portugal pays higher rate to raise 1bn euros

Protesters in Portugal Austerity measures designed to reduce the budget deficit have proved deeply unpopular

Global Economy

Portugal has successfully raised about 1bn euros ($1.4bn; £873m) but is paying a much higher interest rate to lenders.
The government was forced to tap the financial markets to raise money to repay loans falling due next week.
But Lisbon is paying yields of 5.1% and 5.9% to borrow money for six and 12 months, against the 3% and 4% it was paying to borrow last month.
Analysts said paying such high rates was unsustainable for an economy that is seeing virtually no growth.
The BBC's business editor, Robert Peston, said the rate is more than Ireland was paying before it received bail-out funds and "implies Portugal will have to go for a rescue after its general election" in June.
The markets will also be watching closely to see which institutions subscribed to the bond auction.
There has been speculation that some of Portugal's own banks were refusing to take part unless Lisbon applied for a bridging loan from the eurozone's emergency bail-out fund.
The government insists it does not need a bail-out.
The jump in yields was sparked by ratings agency Moody's downgrading Portuguese government debt by one notch, to Baa1 from A3.
The rating is still investment grade - but only just.
It is the second downgrade by Moody's in less than a month and follows fellow agency Standard & Poor's cut last week.
'Confidence crisis' Lena Komileva, global head of G10 strategy at Brown Brothers Harriman, told the BBC before the auction details were released that the financial situation in Portugal "has become critical".
She said: "The government is not just facing a confidence crisis, it is facing a classic, text-book liquidity crisis in the markets.
"The Portuguese banks' attempts to force Lisbon towards seeking some sort of bridge loan [from the bail-out fund] increases the risk of a failed auction [on Wednesday]," she said.
Portugal has to repay more than 4.2bn euros in loans on 15 April, and then another 4.9bn euros in June.
Moody's said Tuesday's downgrade was "driven primarily by increased political, budgetary and economic uncertainty".
Last week, the Portuguese government admitted it had missed its budget deficit target for 2010.
Moody's said the increased uncertainty in the country heightened the risks that "the government will be unable to achieve [its] ambitious deficit reduction targets" in the next three years.

http://www.bbc.co.uk/news/business-12982612
Labels:

Comments

Post a Comment

Popular posts from this blog

Chronology of the Press in Burma

1836 – 1846 * During this period the first English-language newspaper was launched under British-ruled Tenasserim, southern  Burma . The first ethnic Karen-language and Burmese-language newspapers also appear in this period.     March 3, 1836 —The first English-language newspaper,  The Maulmain Chronicle , appears in the city of Moulmein in British-ruled Tenasserim. The paper, first published by a British official named E.A. Blundell, continued up until the 1950s. September 1842 —Tavoy’s  Hsa-tu-gaw  (the  Morning Star ), a monthly publication in the Karen-language of  Sgaw ,  is established by the Baptist mission. It is the first ethnic language newspaper. Circulation reached about three hundred until its publication ceased in 1849. January 1843 —The Baptist mission publishes a monthly newspaper, the Christian  Dhamma  Thadinsa  (the  Religious Herald ), in Moulmein. Supposedly the first Burmese-language newspaper, it continued up until the first year of the second Angl
Post a Comment
Read more

ARSA claims ambush on Myanmar security forces

Arakan Rohingya Salvation Army (ARSA) on Sunday claimed responsibility for an ambush on Myanmar security forces that left several wounded in northern Rakhine state, the first attack in weeks in a region gutted by violence. Rakhine was plunged into turmoil last August, when a series of ARSA raids prompted a military backlash so brutal the UN says it likely amounts to ethnic cleansing of the Muslim Rohingya minority. The army campaign sent some 650,000 Rohingya fleeing for Bangladesh, where refugees have given harrowing accounts of rape, murder and arson at the hands of security forces and vigilantes. Myanmar's military, which tightly controls information about Rakhine, denies any abuses and insists the crackdown was a proportionate response to crush the "terrorist" threat. ARSA have launched few attacks in recent months.  But the army reported that "about ten" Rohingya terrorists ambushed a car with hand-made mines and gunfire on Friday morning
Post a Comment
Read more

Thai penis whitening trend raises eyebrows

Image copyright LELUXHOSPITAL Image caption Authorities warn the procedure could be quite painful A supposed trend of penis whitening has captivated Thailand in recent days and left it asking if the country's beauty industry is taking things too far. Skin whitening is nothing new in many Asian countries, where darker skin is often associated with outdoor labour, therefore, being poorer. But even so, when a clip of a clinic's latest intriguing procedure was posted online, it quickly went viral. Thailand's health ministry has since issued a warning over the procedure. The BBC Thai service spoke to one patient who had undergone the treatment, who told them: "I wanted to feel more confident in my swimming briefs". The 30-year-old said his first session of several was two months ago, and he had since seen a definite change in the shade. 'What for?' The original Facebook post from the clinic offering the treatment, which uses lasers to break do
1 comment
Read more