Portugal remains vulnerable, with the bond market looking increasingly pressured this week.
WSJ: The cost of insuring Portugal's debt against default was at record highs Tuesday and its bond yields remained at elevated levels amid concerns that a possible second bailout for the country in 2013 would include a Greek-model haircut for private-sector bondholders.Even though the WSJ keeps discussing Portugal sovereign CDS, the real focus should be on the bonds, since in the wake of Greece sovereign CDS market is becoming dysfunctional. Portuguese 5-year bond spread to Germany is near the highs.
Worries have mounted among experts that Portugal won't be able to return to markets for funding next year, forcing it to request a second bailout package
|Portugal 5-year spread to Germany (Bloomberg)|
|Portugal inverted yield curve now and on 1/13/12 (Bloomberg)|