Tuesday, November 30, 2010

The Next PIIGS Problem: Portuguese Central Bank Warns Over Debt

Portuguese banks will face an “unbearable” level of risk and find it difficult to refinance their debt if the country fails to implement credible measures to consolidate its public finances, the Bank of Portugal has warned.

A bank report said on Tuesday the country’s sovereign debt difficulties had forced lenders into “permanent and large-scale” dependence on European Central Bank funding that was “not sustainable”.

The central bank said no Portuguese bank had succeeded in making an international debt issue since April, while net bond issues by banks in the first nine months of 2010 were negative – that is, insufficient to offset bonds maturing in the same period, reports FT.

Sounds the Portguese citizens are next in line to be squeezed.

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