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  • Portugal Hit With New Downgrade

    “The situation is a serious one, and it is time for the government to consider asking for some kind of bridge loan,” Mr. Santos Ferreira said. “I believe that the next government will for sure need some kind of help from the European Union and the International Monetary Fund, but for the moment this bridge will be necessary.”

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    Carlos Santos Ferreira, chief executive of Millennium BCP, the country’s biggest private bank, said during an interview on Tuesday that Portuguese banks “are able to buy more debt, but this is for sure not the best way to go.”

    “We have our own ideas about risk,” he said, “and I believe we have already enough Portuguese debt in our balance sheets.”

    His assessment came as Moody’s Investors Service downgraded its rating on Portuguese debt, the second in less than a month, warning that the country’s next government would have to turn to its European partners for aid “as a matter of urgency.”

    Mr. Santos Ferreira was even more forthright, calling on the caretaker government of Prime Minister José Sócrates to negotiate a bridge loan to meet Portugal’s immediate financing needs.

    “The situation is a serious one, and it is time for the government to consider asking for some kind of bridge loan,” Mr. Santos Ferreira said. “I believe that the next government will for sure need some kind of help from the European Union and the International Monetary Fund, but for the moment this bridge will be necessary.”

    Portugal has about 9 billion euros ($12.8 billion) of bond redemptions coming due in April and June, and investors are questioning its ability to meet those payments without help from its European partners or the monetary fund. On Friday, however, the country managed to sell 1.65 billion euros of short-term bills in what was seen as a stop-gap measure.

    The country’s financing costs have continued to climb since late last month, when the Socialist minority government led by Mr. Sócrates resigned after Parliament rejected its latest austerity package.

    Two other rating agencies, Standard & Poor’s and Fitch, have also downgraded the country’s debt rating, raising the likelihood that Portugal will become the third euro country, after Greece and Ireland, to seek a bailout. In both Greece and Ireland, governments fought hard to avoid rescue financing before eventually bowing to market pressure and unsustainable borrowing levels.

    “Two weeks ago I felt that we could get through until June and that our reimbursement schedule was achievable,” said Cristina Casalinho, chief economist of BPI, another leading Portuguese bank. “But now, with all these downgrades, the options have narrowed considerably, to the point that even our own banks are scared of Portuguese debt.”

    Read More:

    http://www.nytimes.com/2011/04/06/business/global/06euro.html?_r=1&hpw

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    1. webuyanycar says:

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      While searching Yahoo I found this page in the results and I didn’t think it fit…

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