Portugal Update

Portuguese bonds are holding their own against the Germany today. The government seems to need around 1 bln euros to meet next months coupon and redemptions. There is some talk that it may seek a bridge loan. That will buy it time until the nearly 7 bln euros are needed in mid-June. A new government could be in place by then as well (55 days after election called), but it is calling it close.

The Portugal's central bank issued its spring bulletin. It expects the economy to contract 1.4% this year and grow 0.3% next. Its forecast for this has not changed much from its January estimate (-1.3%), but next year's growth forecast has been halved. This conceals the hit on the domestic economy because the central bank expects net exports to be stronger.

Separately, the debt agency say that Portugal has completed a little more than a third of this year's medium and long-term debt issuance. Roughly three quarters of Portuguese debt is in foreign hands.