World

Monday 28 July 2014

Portugal may need safety net as it prepares to exit bailout

Mark Deen and John Fraher

Published 25/01/2014|02:30

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French Economy and Finance Minister Pierre Moscovici attends a session at the annual meeting of the World Economic Forum (WEF) in Davos January 24, 2014.                           REUTERS/Ruben Sprich (SWITZERLAND  - Tags: POLITICS BUSINESS)
French Economy and Finance Minister Pierre Moscovici

PORTUGAL may need a precautionary support package as it prepares to exit a three-year financing programme, French Finance Minister Pierre Moscovici has said.

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"Portugal has made tremendous efforts," Mr Moscovici said yesterday in an interview in Davos, Switzerland.

"Is there a need for a precautionary programme? There might be. We'll discuss that."

Portugal is trying to regain full access to debt markets as the €78bn rescue programme put in place in 2011 by the euro area and the International Monetary Fund approaches its end in May.

A precautionary credit line would provide reassurance for lenders at a time when Europe's recovery remains fragile.

The country this month sold €3.25bn of five-year notes through banks in its first offering of coupon-bearing debt in eight months as signs of economic recovery spur a rally in the region's higher-yielding fixed-income assets.

Yields on Portugal's 10-year government bonds dropped below 5pc this week for the first time since August 2010 as a pledge of support from the European Central Bank and record low official interest rates lure bond investors to countries they shut out of sovereign borrowing markets at the peak of the region's debt crisis.

 

Irish Independent

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