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发帖数: 1064 | 1 LONDON (MarketWatch) — The Irish rescue isn’t about Ireland.
Any deal between the Irish government and the European Union and
International Monetary Fund to resolve Ireland’s financial crisis is
ultimately aimed at cutting short the turmoil in sovereign bond markets that
policy makers fear could one day price Portugal or even Spain out of global
credit markets.
Portugal, which like Ireland is a small economy with a relatively illiquid
debt market, is seen as the next country likely to find itself in the sights
of bond traders.
“If you see an Ireland package, we would hope that contagion effects would
be limited,” said Ian Harnett, managing director at Absolute Strategy
Research, a financial consulting firm. “But investors appear to be picking
off weak countries one by one,” leaving Portugal “very much at risk.”
Irish bond yields soared in recent weeks on mounting worries about the
government’s ability to meet the cost of rescuing its crippled banking
sector. European officials upped the pressure on Ireland to apply for a
rescue as turmoil spread to other peripheral bond markets, pushing up
borrowing costs for Portugal and, to a lesser degree, Spain.
Cutting Back: Portugal struggles
As Portugal struggles to fight its typical anemic growth, it's experimenting
with more entrepreneurship and a less heavy state hand.
Portugal’s 10-year bond yield has fallen back below 7% — a level once
described by the nation’s finance minister as unsustainable — after
hitting 7.1% last week as Irish-inspired credit turmoil peaked.
A better position?
But economists say Portugal may avert a rout, at least temporarily, if
Ireland’s woes are addressed in short order.
“While Portugal is clearly the next in line, it is in a better position
than Ireland, which means that it may not need to request loans in the very
near future,” said Emilie Gay, European economist at Capital Economics.
Portuguese banks appear to be in considerably better shape than Ireland’s
banking sector. Unlike Ireland, Portuguese banks have seen their reliance on
wholesale funding through the European Central Bank decline since late
summer, Gay noted.
Portugal’s fiscal picture also isn’t as dire as Ireland’s, Gay said, and
political tensions appear to have eased after the minority government and
the main opposition party agreed on measures to plug a half-billion euro ($
684 million) hole in the 2011 budget.
But Portugal has also been seen as lagging its euro-zone peers in taking
additional fiscal measures, economists said. Perversely, investors also fret
that the scope of the government’s austerity measures will undermine
growth, raising additional questions about the country’s ability to meet
its fiscal targets, said economists at UniCredit in a research note issued
last week. |
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