According to analysts, Portugal will have to use the support mechanism in the coming weeks, as the cost of government borrowing does not move towards an acceptable level.
A chief investment officer said that the cost of borrowing is too high for Portugal. He also added that Greece and Ireland had to rely on the support mechanism when the cost of borrowing was high, with the rate of the 10-year bond yields exceeding 7%.
Therefore, since in Portugal bond rates have also surpassed that level, he expects that this country will require a financial assistance in the coming weeks. Portugal’s 10-year bond yield rose to 7.64% on February 10, which is the highest level since the country joined the euro. Today it stands at 7.45%.
For the first time it rose more than 7% on November 10 and it is at this level since February 4. Note that Greece had to be saved within 17 days from the time the 10-year bond yield surpassed 7% on 6 April, while Ireland held out for less than a month.
Regarding Spain, the chief investment officer believes that it may eventually avoid the use of the support mechanism, although the full picture will clear in late March after the EU summit on the 24th and 25th of the month.
