Portugal Says It Has Reserves to Face Financing Restrictions

Portuguese Prime Minister Pedro Passos Coelho said his country has cash reserves to weather developments that might come from Greece’s standoff with creditors.

“If anything happens, we have reserves to face any more serious financing restriction that might occur in international markets,” Coelho said Tuesday night at an event in Oporto, northern Portugal. “And that’s the reason why if something more serious happens in Greece, Portugal won’t fall next because it doesn’t have any problem of financing in the markets.” His comments were broadcast by television station RTP.

The Portuguese government built up a cash buffer before the end of its aid program and the country’s debt agency forecast in a May 29 presentation that Portugal’s treasury cash position will be 9.8 billion euros ($11 billion) at the end of 2015, compared with 12.4 billion euros at the end of 2014.

Portugal has been selling longer-maturity bonds and easing debt repayments due in the next three years after exiting a bailout program provided by the European Union and the International Monetary Fund. Coelho’s government, which faces elections in September or October, in March made an early repayment of part of its IMF loan after the European Central Bank announced a bond-buying plan and borrowing costs fell.

The country’s 10-year bond yield is at 3.15 percent, after falling to 1.509 percent on March 12, the lowest since Bloomberg began collecting data in 1997. The yield climbed to more than 18 percent in 2012. The nation’s debt remains rated below investment grade by Fitch Ratings, Moody’s Investors Service and Standard & Poor’s.

“Portugal’s treasury is able to face any volatility in external markets until the end of the year,” Coelho said.

The debt agency said in the May 29 presentation that it had already sold 12.6 billion euros of bonds this year and planned to sell another 6.9 billion euros of the securities in 2015.

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