Portugal's government bond yields fell to a near five-month low on Monday, significantly outperforming other Eurozone bonds, as the rating agency S&P upgraded the country's credit rating outlook from negative to stable.
S&P announced the decision to upgrade Portugal's credit rating outlook after the close of European markets last Friday, marking one of the latest series of supportive news improving the outlook for Portugal since the government crisis in July caused the yield on Portugal's 10-year bonds to rise above the unsustainable level of 8%.
The yield on Portugal's 10-year bonds fell by as much as 14 basis points during the session to 5.86%, close to the low reached in early June. The spread between Portugal's 10-year and 2-year bond yields is at its widest since July, reflecting reduced market concerns about the government's ability to undertake financial restructuring.
Currently, Portugal is beginning to recover from its most severe economic recession since the 1970s. The International Monetary Fund (IMF) noted last Friday that the country's bailout program is progressing in an orderly manner, and thus the IMF will disburse another €1.9 billion loan to Portugal.
