Snowden on eurozone debt crisis: Is Portugal next?

IS PORTUGAL NEXT?

In his regular bond blog, Old Mutual's Stephen Snowden explains why Portgual could be the next PIIGS economy to require an EU bailout.

Greece was the first European nation to accept support from the EU and IMF, in May 2010. Ireland followed in November. Will Portugal be next? The experience of Ireland confirmed why investors holding banking sector bonds need to keep a sharp eye on government bond markets. There is no exact or necessary correlation, but it has always been understood that states implicitly guarantee their core financial institutions, those that are ‘too big to fail'. When a state is no longer able to finance itself, that guarantee starts to lack credibility - and the value of bank bonds starts to fall. ...