| Advertisement |
LISBON, Portugal, Jan. 12 (UPI) -- Portugal will try to sell about $1.63 billion in long-term debt amid concern it will be need to follow Greece and Ireland and seek a bailout, analysts said. "We are quite negative on Portugal," Pavan Wadhwa, a European rates strategist at JPMorgan Chase & Co. told The New York Times.
Advertisement
The auctions Wednesday of four- and 10-year bonds -- Portugal's first since Ireland's European Union-International Monetary Fund bailout in November -- will likely be at record-high borrowing rates, analysts said, heightening worries Portugal won't be able to keep raising capital in the markets to fund its budget deficits.
The cost for Portugal to borrow the money it hopes to raise Wednesday, which reached an anticipated 7.3 percent for its benchmark 10-year bonds Friday, remained near that record high, at just below 7 percent, Tuesday -- a level that led Ireland and Greece to seek financial rescue packages last year, the Times said.
Portugal, which hopes to sell at least $975.4 billion in bonds, insisted Tuesday it would not need a bailout, even as the country's central bank said Portugal would sink back into recession.
"Portugal won't request any financial help for the simple reason that it doesn't need it," Prime Minister Jose Socrates said at a news conference.
The Bank of Portugal forecast Tuesday a 1.3 percent contraction of Portugal's economy this year, after earlier forecasting zero growth. The government had predicted 0.2 percent growth.
A Portuguese bailout, while itself not a reverberating economic disaster, could push the eurozone sovereign-debt crisis toward catastrophe, said Jonathan Loynes, chief European economist of London's Capital Economics Ltd. research firm.
"As the last of the troubled small economies -- Belgium aside -- the provision of assistance to Portugal could clearly shift further attention onto the plight of some of the bigger eurozone economies, most obviously Spain, with potentially disastrous consequences," he told the Financial Times.
