Our nation's debt is literally indenturing our children to our international debt holders, but most Americans don't care because they are more concerned about the latest saga involving Snooki on Jersey Shore rather than what really matters, our country’s future.

Thursday, January 26, 2012

Has Portugal's debt default clock begun to tick? - Yahoo! Finance

By Axel Bugge

LISBON (Reuters) - Portugal clinched a deal on ambitious labor market reforms this week and carried out its biggest debt sale since seeking a 78-billion-euro bailout, but the challenges for the second-most risky country in the euro zone may be shifting up a gear.

Undermining the glow of Lisbon's achievements is the rapidly rising market concern that Portugal is the next potential candidate to default in the euro zone after Greece -- a point that is fast becoming clear as Athens approaches the end of its debt restructuring talks.

"Portugal is obviously the next in the line of fire," said Michael Cirami, a portfolio manager at U.S. investment managers Eaton Vance. "Portugal is unlikely to go unnoticed whether they strike a deal or not (on Greek debt restructuring)."

The concerns were clearly borne out this week as Portugal's bond yields rose virtually without interruption, to all-time highs, despite the issuance of 2.5 billion euros of short-term treasury bills on Wednesday at slightly lower yields.

The country's 10-year yields rose to almost 15 percent on Thursday and hovered around 14.80 percent on Friday. Five-year credit default swap prices implied the market was pricing in a 66.8 percent chance of a Portuguese default.

The sharp rise in bond yields was partially triggered by Standard & Poor's downgrades of European countries last week, which left Portugal as the second euro zone country to be rated "junk" by all the main rating agencies, along with Greece.
Read more: Has Portugal's debt default clock begun to tick? - Yahoo! Finance

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