Portugal: orthodoxy, certainty and reward

Summary

A couple of years ago, the risk premium paid by the Portuguese 10-year government bond against its German counterpart was hovering between 350 and 400 basis points (bp). Meanwhile, the Spanish 10-year bond was paying between 100 and 125 bp.

Key points

• Key points:
• While Spain continues to pay an extra yield similar to that of a few years ago, the Portuguese risk premium is now barely 10 or 15 bp above the Spanish.
• The market appears to be rewarding the Portuguese economy for an orthodox fiscal policy and for the reduction in uncertainty about economic policy.

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