Portugal finance minister confident bond slump "temporary," says Novo Banco options open

Record ID: 163612

  • Title: Portugal finance minister confident bond slump "temporary," says Novo Banco options open
  • Date: 9th January 2017
  • Summary: LISBON, PORTUGAL (JANUARY 9, 2017) (REUTERS) EXTERIOR OF FINANCE MINISTRY BUILDING INTERVIEW WITH FINANCE MINISTER IN PROGRESS (SOUNDBITE) (Portuguese) PORTUGAL'S FINANCE MINISTER, MARIO CENTENO, SAYING: "We obviously see this rise (in yields) as temporary and associated with very specific (external) factors of uncertainty and low market liquidity." INTERVIEW IN PROGRESS (SOUNDBITE) (Portuguese) PORTUGAL'S FINANCE MINISTER, MARIO CENTENO, SAYING: "In 2017, Europe also has a set of very significant political uncertainties, which together have put pressure on European debt markets and particularly the Portuguese one." INTERVIEW IN PROGRESS (SOUNDBITE) (Portuguese) PORTUGAL'S FINANCE MINISTER, MARIO CENTENO, SAYING: "We are living a complex political moment in Europe and without becoming a political analyst, there are recent phenomena in Europe that seems at least in an apparent way to put at risk a large part of the European construction that we have built in recent decades." INTERVIEW IN PROGRESS (SOUNDBITE) (Portuguese) PORTUGAL'S FINANCE MINISTER, MARIO CENTENO, SAYING: "No door can remain closed because in order to achieve criteria or objectives that sometimes might seem contradictory we have to enlarge the number of possibilities to act and clearly admit that if a sale does not happen, there may be other alternatives that allow us to reach the first of our objectives which is stability of the financial sector." REPORTER INTERVIEW FINISHING / MINISTER LEAVING
  • Embargoed: 24th January 2017 15:46
  • Keywords: Mario Centeno Portugal Finance Minister Economy Novo Banco. Bond yields Europe
  • Location: LISBON, PORTUGAL
  • City: LISBON, PORTUGAL
  • Country: Portugal
  • Topics: Budget/Taxation/Revenue,Government/Politics
  • Reuters ID: LVA0015YD03TV
  • Aspect Ratio: 16:9
  • Story Text: Portugal's finance minister said on Monday (January 9) the recent sharp rise in the country's bond yields was temporary and was caused by low liquidity during the Christmas season and political uncertainty in Europe, as opposed to specific factors related to Portugal.
    In an interview with Reuters, Mario Centeno said that as markets return to normal after the Christmas season, Portugal's improving economic fundamentals were likely to sooth investor concerns.
    Portugal's bond yields rose to 11-month highs of 4.09 percent on Friday (January 6) but they dipped back below the psychologically important 4 percent level on Monday.
    "Clearly we see this rise (in yields) as temporary and associated with very specific (external) factors of uncertainty and low market liquidity," Centeno said.
    He said Portugal's budget deficit in 2016 allowed the country to definitively leave behind Europe's excessive deficit procedure. The budget gap last year was "highly likely" to end below the government's latest forecast of 2.4 percent of gross domestic product, he said.
    Portugal's net debt was also likely to register a decline - to 120.6 percent of GDP in 2016 from 121.6 percent a year earlier - and growth is set to accelerate this year. The economy grew around 1.2 percent last year and Centeno said this year's forecast of 1.5 percent will be helped by positive "carry over" from the end of 2016.
    Centeno said the country hoped to broaden its investor base this year, including through sales of more retail bonds.
    But the minister said uncertainty had risen, listing Britain's decision to leave the European Union, the referendum in Italy which culminated in a change of government and the future of U.S. economic policy under Donald Trump.
    "In 2017, Europe also has a set of very significant political uncertainties, which together have put pressure on European debt markets and particularly the Portuguese one," he said.
    He listed elections this year in Germany, France and Holland, as points of uncertainty, when populists could advance.
    "We are living a complex political moment in Europe and without becoming a political analyst, there are recent phenomena that seem to put at risk a large part of the European construction that we have built in recent decades," he said.
    Turning to Lisbon's planned sale of Novo Banco, the minister would not rule out any possibility, including potential nationalisation, if an agreement is not reached with a potential buyer in the current round of negotiations.
    "No door can remain closed," he said, adding the government has to "admit that if a sale does not happen, there may be other alternatives that allow us to reach the first of our objectives which is stability of the financial sector."
    He said any other option for Novo Banco would have to be discussed with European authorities. The country has agreed August 2017 deadline with Brussels for the sale.
    Analysts have said the bidders for Novo Banco are requesting state guarantees to face potential future litigation costs.
    Last week, the central bank picked U.S. private equity firm Lone Star to further negotiations on the sale of Novo Banco, the bank carved out of collapsed Banco Espirito Santo.
  • Copyright Holder: REUTERS
  • Copyright Notice: (c) Copyright Thomson Reuters 2017. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register