This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Portugal, No Longer Contagious, Is on the Rebound

NEW YORK (TheStreet) -- It's official: Portuguese Prime Minister Pedro Passos Coelho affirmed Sunday his nation Portugal will exit the European Union/International Monetary Fund/European Central Bank bailout on May 17.

And in a development some seem to fret, the nation will do it Irish-style, with no precautionary credit line to tap in the event of renewed difficulty. The investment implications here, like Portugal geographically, are relatively small. But the turnaround story is noteworthy as it illustrates the maturation of sentiment in this bull market.

When the eurozone crisis began in May 2010, Portugal wasn't the center of attention -- Greece was. But as contagion fears grew, folks fretted Portugal would be the next Greece with structural competitiveness issues, a Socialist government unable or unwilling to enact reforms, no independent currency and a heavy dose of government ownership in the economy.

As speculation swirled, yields shot skyward from 4.1% 10-year sovereign yields at December 2009's close to 6.4% in early May 2010. In early 2011, rates rose sharply, reaching 10% by May, leading to Portugal's 78 billion euro bailout request. In early 2012, Greece defaulted and fears grew Portugal would follow. Ten-year yields kept rising, hitting 15.8% in January 2012. The economy suffered greatly, contracting 10 consecutive quarters beginning in the fourth quarter of 2010. Unemployment rose, peaking above 17%. Political instability followed.

Then-PM Jose Socrates' Socialist government collapsed in late 2010. Passos Coelho's reforms met with opposition, protest and confidence votes. Portugal was a key cog in broader eurozone fears. Default and fears of contagion could grow. Hold on and folks may realize Greece is an anomaly.

The shoe never dropped and Portugal is rebounding. Following a highly successful return to bond markets last year, capped off by the sale of 10-year debt at affordable rates, yields on Portuguese sovereign debt are down to pre-crisis lows. Friday, 10-year Portuguese debt traded at a 3.6% yield.

Source: FactSet, 05/02/2009-05/02/2014.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $126.41 0.00%
FB $81.21 0.00%
GOOG $575.33 0.00%
TSLA $200.63 0.00%
YHOO $44.16 0.00%

Markets

DOW 18,135.72 +38.82 0.21%
S&P 500 2,101.04 +2.51 0.12%
NASDAQ 4,982.8090 +15.6680 0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs