Portugal's five-year bond yields are stuck around 16 per cent, where Greek bonds traded in April 2011 when eurozone politicians started to insist private creditors should take losses. The flash point is a €9.7 billion ($12.84 billion) bond maturing in September 2013 that isn't covered by Portugal's €78 billion bailout. Until Lisbon explains where it will find the money, investors will fear a repeat of Greece's debt restructuring.
Vitor Gaspar, Portugal's finance minister, hopes rising confidence will allow it to return to markets in time to refinance the 2013 bond. Encouragingly, Portugal plans to sell 18-month Treasury bills later this year. And a new International Monetary Fund analysis will show Portugal's debt peaking three percentage points lower than previously forecast at 115 per cent of GDP in 2013, Mr Gaspar says. That is comparable to Ireland and below Italy's debt levels.
But a gradual rise in confidence might not cut it, and T-bills alone can't plug the gap. Portugal will need to start issuing bonds well before September 2013; Ireland hopes to return to market this year to start refinancing a January 2014 maturity. The IMF usually wants to see funding available to cover the next year's needs.
That makes September 2012 a crunch point for Portugal, as March 2011 was for Greece.
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