LISBON. Wed, April 6, 2011 9: 16 am EDT
Lisbon (Reuters) - transitional Government of Portugal, fighting to avoid a bailout, said Wednesday a political crisis had caused "irreparable damage" after borrowing costs exploded as he sold one billion euros in debt in the short term.
The sale of the bonds of 6 and 12 months brought temporary relief to a country struggling with high rates, political uncertainty, rating downgrades and a warning by local banks that they can no longer be able to buy government debt.
But the performance on 12 good months doped 5.902% to 4.311% three weeks ago and on invoices from six months to 5.117 2.984% %, highlighting before financial pressure of big buybacks this month here and in June.
"I suspect that with regard to the market, financing at these levels can be considered as a temporary measure," said Peter Chatwell, strategist of rate at Credit Agricole.
Cost of the credit Portugal has jumped since the minority Socialist government resigned last month after a parliamentary defeat on austerity measures more severe political casting of the country in limbo. Early general elections is set for June 5.
The Ministry of finance, said the auction is a confirmation of the deterioration caused by the rejection of the austerity plan and promised to take all necessary measures to ensure the liquidity and funding for the economy. But he refused to talk with the European Union on how to meet the needs of borrowing.
"Current interest rates allow to conclude that the damage caused by the rejection of the plan of austerity are irreparable," said a statement by the Ministry.
The Government has previously held by regular budgetary targets and cut expenses he could regain the trust of investors to hope.
He admitted last week that the budget deficit for 2010 had struck 8.6% of the domestic product gross, well above its target of 7.3%, but said that objective this year 4.6% would be met.
Local banks delivered a unprecedented warning to the Government Monday to request a loan for emergency short term market concerns ease before the election, saying that under present conditions, they cannot continue the purchase of the debt of the Government.
"It was a very important signal of banks for the future," said BNP Paribas analyst Ioannis Sokos. "Portugal still succeed in April, but will probably get to June without a rescue plan."
MOODY S DOWNGRADES BANKS
Adding pressure on banks, agency rating of Moody followed by a sovereign downgrade of a notch and cut the creditworthiness of seven local banks by one or more cuts, citing concerns about the situation of the banks and the ability of the Government to support.
Finance Ministers European meeting in Budapest later this week will try to clarity of the interim administration on what type of support, where appropriate, he may request before the election.
The European Commission said Wednesday, there was no discussion about releasing aid because Lisbon did not help.
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