Market: Portugal Is Next
Once the next stage of the Greek saga plays out, the markets will turn their attention to another country. Based on recent action in the credit default swaps (CDS) market, Portugal seems to be next in line. According to MNI:
Fears that Portugal could be the next Eurozone member to restructure its debt drove up yields on the country’s sovereign bonds Wednesday as the cost of insuring them rose to a record high.
Credit default swap contracts on Portugal climbed 62 basis points to 1,240, signalling a 64 percent probability of default within the next five years, according to the financial information firm Markit.
Analysts said the continuing deterioration this week has stemmed from worries that a disorderly Greek default could leave Portugal exposed as the next most vulnerable EMU country.
“There has been some forced selling in the cash market, but a bigger factor has been the uncertainty around the Greek PSI,” said Gavan Nolan, director of credit research at Markit. “Portugal is the next candidate for a restructuring.”
