N***i
发帖数: 2063 | 1 US keeps on lambasting Euro zone. It downgraded Greece first, then Gree got
some money from Europe and IMF. It downgraded Greece further to make the
market think that the money given by Euro zone and IMF is not enough. Now it
begun to downgrade Portugal. Who is going to be the next one to be downgraded
in PIGS? Spain?
US will not let Euro zone go without pain or until some deals are made.
http://online.wsj.com/article/BT-CO-20100427-713789.html?mod=rss_Bonds
By John Kell, Michael Wilson and Emese Bartha
of DOW JONES NEWSWIRES
Standard & Poor's Corp. cut Portugal's credit ratings by two-notches Tuesday, saying it expects the nation's government to struggle to stabilize its relatively high debt ratio until 2013.
In response, the euro fell against the dollar and U.S. Treasurys moved higher.
The cost of insuring Portuguese bonds against default rose in reaction to the news, with the annual cost of protecting $10 million of Portuguese debt against default for five years hitting $365,000, up from $343,000 before the announcement and $311,200 at Monday's close, according to CMA Datavision.
In fact, Portuguese credit default swaps have pushed sharply higher in the last few days on fears that the situation in Greece may spill over into other euro-zone nations judged to be facing a similar fiscal predicament, although some say the nation is better-positioned to fix its finances than Greece.
Indeed, in reaction to the downgrade, the Portuguese finance ministry said that Portugal and Greece are "very different realities," adding that it will do whatever is necessary to cut its budget deficit.
Like Greece, Portugal faces years of feeble growth, held back by high public debt, low productivity and an aging population, although it has a better track record at improving its public finances, even in a weak economic environment.
S&P said Tuesday it considers it likely that relatively rigid product and labor markets could impede growth prospects in Portugal, prolonging the adjustment in prices and wages it views as necessary to regain external competitiveness.
Compounding Portugal's problems are its sizeable forthcoming debt maturities.
David Schnautz, strategist at Commerzbank AG in Frankfurt says Portugal faces considerable refinancing pressure in the coming months, with the nation facing bond redemptions of EUR5.628 billion as soon as May 20.
So far this year, Portugal has sold some EUR8.93 billion of bonds, including the euro-equivalent of EUR936 million of a dollar-denominated bonds. However, the Portuguese debt agency has already bought back EUR1.46 billion so far this year, and plans to buy back another EUR300 million slated for April 28.
"This makes it very likely that Portugal would have to return to the primary market arena ahead of the May redemption, a task very challenging in the current extreme adverse market environment for peripherals," Schnautz said.
S&P believes Portugal's past dependence on now more scarce external financing as a source of economic growth coupled with its weak external competitiveness mean the Portuguese government would need to implement fiscal consolidation over and above its current plans to reach current targets.
The government's deficit rose to 9.4% of gross domestic product in 2009, from 2.7% the prior year. The government initially chose to implement only limited consolidation measures this year, which is why S&P still sees a high deficit at 8.5% of GDP this year.
-By John Kell, Michael Wilson and Emese Bartha; Dow Jones Newswires; 212-416-2480;
j*******[email protected]
(Brian Blackstone of The Wall Street Journal contributed to this report.) | u*****n
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