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Fitch Downgrades Portugal To Junk On General Strike Day

Tyler Durden's picture




 

Just a step behind the Chinese as usual, and just in time to kill a modest EURUSD rally. Also on the same day as the first mass strike in Portugal which reminds us that everyone will want a piece of the debt reduction pie.

From Reuters:

Rating agency Fitch downgraded Portugal's rating to junk status on Thursday, citing large fiscal imbalances, high debts and the risks to its EU-mandated austerity program from a worsening economic outlook.

 

Fitch cut Portugal to BB+ from BBB-, which is still one notch higher than Moody's rating of Ba2. S&P still rates Portugal investment grade.

 

Fitch said a deepening recession makes it "much more challenging" for the government to cut the budget deficit but it still expects fiscal goals to be met both this year and next.

 

"However, the risk of slippage - either from worse macroeconomic outturns or insufficient expenditure controls - is large," Fitch said.

 

Portugal's 10-year bond yields rose sharply to around 13.15 percent after the downgrade from 12.71 percent late on Wednesday, with the spread over benchmark German bunds rising 21 basis points on the day to 1,095 basis points.

 

Portugal sought a 78-billion-euro bailout from the European Union and IMF earlier this year and has adopted sweeping austerity measures to bring public accounts under control.

 

Under the loan programme Portugal must cut the budget deficit to 5.9 percent of gross domestic product this year from around 10 percent in 2010. Next year it must cut the deficit further to 4.5 percent.

 

Fitch said the state-owned "enterprise sector is another key source of fiscal risk" and has caused a number of upward revisions to the country's debt and budget deficit figures this year. The government has said there was an unexpected fiscal shortfall of about 3 billion euros this year.

 

"Given these downside risks, Fitch sees a significant likelihood that further consolidation measures will be needed through the course of 2012," Fitch said.

In the meantime, Syntagma goes to Lisbon where, unlike Italy, austerity does not mean increasing the retirement age by 48 days every year for the next 15.

Portuguese workers launched a general strike on Thursday to protest against austerity measures imposed as the price of an EU bailout designed to keep Portugal afloat and stem a deepening euro zone debt crisis.

 

Planes were grounded, trains halted and public services interrupted as workers across the nation of 11 million protested against job losses, tax and pay cuts agreed between Portugal and the troika of lenders -- the European Commission, European Central Bank and International Monetary Fund.

 

All international flights to and from Lisbon and Porto were cancelled for the duration of the 24-hour walkout, according to the website of the airport authority ANA, and only minimum services connecting mainland Portugal with the islands of Madeira and the Azores were operating.

 

"The strike is general, the attack is global!" chanted protesters in a picket line at the Lisbon airport, referring to what unions say is an attack on workers' rights.

Snapshot of Portugese bond spread to Bund viagra:

 

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Thu, 11/24/2011 - 09:06 | 1910283 greased up deaf guy
greased up deaf guy's picture

happy thanksgiving, portugal.

Thu, 11/24/2011 - 09:23 | 1910316 HoofHearted
HoofHearted's picture

http://www.youtube.com/watch?v=LvdLovAaYzM

Step by step, heart to heart, left right left, we all fall down....like toy soldiers.

Thu, 11/24/2011 - 09:41 | 1910345 Harlequin001
Harlequin001's picture

Nooooooooooooooooooooooooooooo!!!

Thu, 11/24/2011 - 09:07 | 1910284 lolmao500
lolmao500's picture
European oil companies are providing Syria with a steady supply of gasoil according to traders and shipping data

Bullish.

Thu, 11/24/2011 - 09:08 | 1910285 cossack55
cossack55's picture

Be nice if the Portos got a little advice from Iceland on how to succeed in killing the squid.

Thu, 11/24/2011 - 09:10 | 1910292 wandstrasse
wandstrasse's picture

What is in the portugese anthem,again? As armas, as armas lalala..: get armed, get armed..

Thu, 11/24/2011 - 09:11 | 1910294 johny2
johny2's picture

this is going to be really interesting. break up of EU, bankruptcy of USA, Oil priced in gold. Thank god we haven't got lots of nuclear and bio chemical weapons to worry about, in addition to all the traditional ones.

Thu, 11/24/2011 - 09:19 | 1910306 Mike2756
Thu, 11/24/2011 - 09:13 | 1910297 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

The rating agencies as always are behind the curve. Tools of the Man. All of Europe is close to junk rating and soon rest of the world will follow.

Thu, 11/24/2011 - 09:14 | 1910299 slaughterer
slaughterer's picture

+1

Thu, 11/24/2011 - 09:19 | 1910307 fockewulf190
fockewulf190's picture

Just came across the german press that the Merk and her
CDU/FDP acolytes are all of a sudden in full flip flopping modeand are now happy backers of the monsterspawn known as Eurobonds. Looks like Fitch gave the cover the Merk needed. Betcha this was planned.

Thu, 11/24/2011 - 09:35 | 1910333 lolmao500
lolmao500's picture

Eurobonds are not THAT bad... EFSF is worse.

Thu, 11/24/2011 - 09:21 | 1910310 fonzanoon
fonzanoon's picture

S&P still rates it investment grade.

Thu, 11/24/2011 - 09:21 | 1910311 fonzanoon
fonzanoon's picture

My apologies....SARC

Thu, 11/24/2011 - 09:22 | 1910312 Auburn
Auburn's picture

From Portugal News: ( No wonder they're in trouble!  Pissed at not receiving bonuses while their country goes tits up.  Sweet baby Jesus! )

Petrol bomb attacks on tax offices
Two tax offices in Lisbon were attacked with petrol bombs Thursday a police source said. The police confirmed that the office windows were smashed while a third tax office had cans of paint thrown at it. Most of Portugal’s public services are at a stand still Thursday due to a general strike called by the two main union confederations in protest against thye government’s austerity measures, particularly the non-payment of Christmas and holiday bonuses to public sector workers and pensioners.

Thu, 11/24/2011 - 09:37 | 1910336 nmewn
nmewn's picture

"...particularly the non-payment of Christmas and holiday bonuses to public sector workers and pensioners."

ROTFL!!!

Yes, because clearly, retired bureaucrats feel entitled to a bonus for doing nothing!

Thu, 11/24/2011 - 09:22 | 1910313 Peter K
Peter K's picture

The sooner Portugal admits to itself that Socialism es muerte, the sooner the healing process can begin, and the sooner the pain will cease. It's just that simple:) Happy Thanksgiving Day wishes to all Portugese in thier darkest hours.

Thu, 11/24/2011 - 09:22 | 1910315 Iliketurtles
Iliketurtles's picture

This clearly proves that we need more stimulus

Thu, 11/24/2011 - 09:26 | 1910318 HoofHearted
HoofHearted's picture

Thank you, John Maynard...er, anonymous caller.

Thu, 11/24/2011 - 09:41 | 1910346 Vlad
Vlad's picture

Full statement from Fitch, if anyone's interested. http://pastebin.ca/2095345

Thu, 11/24/2011 - 10:42 | 1910496 eurogold
eurogold's picture

Portugal......the next Greece, or is it the next Italy, I can't remember.

Thu, 11/24/2011 - 10:55 | 1910542 NorthPole
NorthPole's picture

So do I buy GS or what??

Thu, 11/24/2011 - 10:56 | 1910544 NorthPole
NorthPole's picture

So do I buy GS or what??

Thu, 11/24/2011 - 12:42 | 1910871 PulauHantu29
PulauHantu29's picture

Junk? Wait until they see real junk!

Thu, 11/24/2011 - 13:06 | 1910953 navy62802
navy62802's picture

The striking workers are right. The attack is global. We are all being attacked by the squid that is the central banks and global financial system.

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