Focus on Portugal Immigration and Portugal's Economic developments: As the new year begins, the yield on Portugal's long-term government bonds in the secondary market has decreased. On the 2nd and 3rd, the 10-year yields were 5.73% and 5.78% respectively, narrowing the spread with Germany to 376 basis points, which is a lower level since the implementation of the bailout plan. The 5-year and 2-year yields have also dropped to 4.71% and 2.84% respectively, bringing good news for Portugal's "good start".
Industry experts believe that this performance is positively influenced by the cautious optimism expressed in the President's New Year address and the commencement of the government budget. President Da Silva stated that Portugal would not seek a second bailout after the end of the rescue plan, and would only possibly need a contingency plan (some opinions suggest that the substantive content of this plan remains a bailout measure). Achieving a mid-term political consensus on the country's main goals and public policies will have a decisive positive impact during the "post-bailout" period. Regarding the government budget, apart from the previously ruled unconstitutional pension issue, the Constitutional Court will no longer conduct prior reviews of other austerity measures to be implemented in 2014, but will assess them as necessary during the execution process in the new year.
Portugal will end its bailout plan on May 17, 2014. Whether it can smoothly return to the primary market for self-financing largely depends on market interest rates. As interest rates hovered around 6% at the end of 2013, industry insiders are concerned that Portugal may have to seek international assistance again when exiting the bailout in six months. In response, the Portuguese government has consistently stated that it will try to avoid this.
J.P. Morgan analysis indicates that Portugal will need to finance 8 billion euros in 2014, predicting that the government will first issue 3 billion euros in 5-year bonds in January as a trial, followed by 3 billion euros in medium-term and 1 billion euros in long-term bonds in the third quarter, with the remaining 1 billion euros to be issued in the last three months.
