Portuguese 5-yr CDS at record high, spread wider

LONDON, April 26 | Mon Apr 26, 2010 4:55am EDT

LONDON, April 26 (Reuters) - The cost of insuring Portuguese government debt against default jumped to a record high on Monday on concern that Portugal could be next to suffer a Greek- style debt crisis if no lasting solution was found for Athens.

The price of insuring against a Greek debt default also rose, to 619,000 euros per 10 million euros of exposure from 614,600 euros at the New York close on Friday, according to credit default swaps data from CMA DataVision.

Portuguese 5-year CDS rose to a record 288 basis points from from 278.8 bps at the New York close on Friday.

"The Greek crisis has started to spread to the rest of the periphery and Portugal seems to be next in line. The situation there is less urgent than in Greece, but the medium-term outlook is challenging," said Darren Williams, senior economist at Alliance Bernstein.

"Unless Europe's leaders can draw a line under the situation, Portugal could face an uncomfortable period."

The premium investors demand to hold 10-year Portuguese government bonds rather than euro zone benchmark German Bunds hit a euro lifetime high of 205 basis points versus 193 bps at the European settlement close on Friday PT10YT=RREU10YT=RR.

(Reporting by Emelia Sithole-Matarise)

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Comments (9)
jadams76 wrote:
Obama and the Democrats are racing to spend the U.S. into Greece and Portugal levels of debt. They think their salvation will be the VAT. Guess what? They already have the VAT in these countries and Greece just raised theirs again. Tax and spend doesn’t work,never did work and never will and now will break us all. Cutting spending is the only answer and as long as Obama and his [Social]Democrats are in power that will never happen. As Oscar Wilde said “Those who rob Peter to pay Paul, can always count on the support of Paul.”

Apr 26, 2010 1:36pm EDT  --  Report as abuse
Asar wrote:
This is yet another sign that the capitalistic system does not work. I for one hate people who try to rationalize an irrational and broken economic system. Can we as humans think of a better way to live?

Apr 26, 2010 2:31pm EDT  --  Report as abuse
hardrain77 wrote:
Asar,

What we’re living under isn’t anything close to free market capitalism, it’s Central Banking that creates these lasting booms and busts.

The Fed. The EU. The IMF. These are the institutions dragging the world down. When one exists, it controls the other.

Apr 26, 2010 3:01pm EDT  --  Report as abuse
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