Portugal

Debt powers Altice into European TMT’s big league

1 Dec 2014

Patrick Drahi’s telecom group paid $23 bln for France’s SFR and is nearing a $9 bln Portuguese purchase. More deals may follow. Cheap debt and euphoria about cable have helped. The billionaire’s team will have to excel at integration to run an empire that dwarfs many blue chips.

Rushed BES sale would compound Lisbon’s bank folly

19 Nov 2014

The Bank of Portugal thinks Banco Espirito Santo’s healthy rump can be sold early next year. But dashing to offload Novo Banco could leave other domestic banks with losses. Unless Portuguese bank regulation wants to take another reputational hit, a sale shouldn’t be fast-tracked.

BES Angolan folly shows perils of global banking

21 Oct 2014

The bailed-out Portuguese lender has lost 80 pct of a 3.3 bln euro interbank loan to its Angolan arm. Putting banks into national silos is often seen as unwise. But if they are this reckless, pushing them to match assets and liabilities locally isn’t such a bad idea. 

Portugal Telecom’s a stretch for French cable king

8 Oct 2014

Patrick Drahi is circling the $8 bln Lisbon firm. PT is in play due to self-inflicted injuries and the weakness of Brazilian parent Oi. But Drahi makes an odd suitor. His $22 bln purchase of France’s SFR hasn’t even closed. And PT is less of a fixer-upper than his usual targets.

Portugal bank panic betrays more than bad judgment

7 Aug 2014

Investors are fretting that Portuguese banks will have to pay for BES’s bailout. That mistakenly assumes new “good bank” Novo Banco is worthless. A better target for scepticism is BES’s bad bank, which looks overvalued. The real problem is Lisbon’s ropey record on bank oversight. 

Credit Agricole’s BES exit is predictably clumsy

5 Aug 2014

The French farmers’ bank has taken a 708 mln euro hit from the bailed-in Banco Espirito Santo. CredAg had been trying to manage an exit from its Portuguese stake to avoid a repeat of losses in Greece and Spain. But it still had to wait for BES to implode to make its departure. 

BES bail-in leaves CDS traders struck out

5 Aug 2014

Banco Espirito Santo’s bail-in meant a killing for any traders that bought the bank’s senior debt and shorted its subordinated bonds. But not all arbs will be celebrating. A technicality means those who shorted credit default swaps on BES’s junior debt have lost out.  

BES’s flawed bailout mixes timidity and bad timing

4 Aug 2014

Had the Portuguese bank collapsed in July 2015, new EU bail-in rules would have made it easy to force the bank’s senior lenders to stump up the needed 4.9 bln euros. As it is, Lisbon can argue the legal details aren’t yet in place – and arrange another taxpayer-backed bailout. 

Underwriters share blame in Portuguese bank fiasco

1 Aug 2014

Banco Espirito Santo’s shares have tanked 70 pct since a rights issue barely two months ago. UBS and Morgan Stanley, which led the 1 bln euro equity raise, hoisted red flags. The banks could have heeded their own findings and refused the job. Customers have a right to be angry.

Shock loss at BES makes bail-in a real risk

31 Jul 2014

The Portuguese bank made a 3.6 bln euro first-half loss and warned of possible illegal activity. The central bank suspended key staff. BES needs capital fast. But with Angolan issues unresolved, sourcing it from private investors rather than creditors just got much harder.  

BES clear-up still leaves Angolan question hanging

25 Jul 2014

The troubled Portuguese lender’s three parent entities have all now sought creditor protection. That should clarify the bank’s losses and ownership, leaving Angola as BES’s key uncertainty. There is a way to sort this out too – but it isn’t pretty.

Banco Espirito Santo could lure periphery bulls

15 Jul 2014

The stock has fallen sharply again. Forced selling for margin calls may be the main reason but a capital hike is needed to stabilise matters. On a gloomy analysis, the Portuguese bank probably still has a sliver of equity. That suggests opportunity for a private-sector saviour.

Banco Espirito Santo’s part-reveal is inconclusive

11 Jul 2014

The Portuguese bank says it has a 2.1 bln euro capital cushion to protect it from its troubled parent. The central bank agrees. But details are still murky, and a cloud hangs over its Angolan unit. Until the Espirito Santo network restructures, investors have reason to fret.

Portugal makes world look a little shakier

10 Jul 2014

Problems at one smallish bank don’t justify the slump in European stocks. Yet even as the U.S. finally heals, recent data from the EU, China and Japan has mostly been discouraging. In another lukewarm year, investors probably should be jittery – and market over-reactions expected.

Portugal in race against time to sort out BES

10 Jul 2014

Despite a recent successful rights issue, the Iberian lender is exposed to its troubled major shareholder and has a large exposure to dodgy Angolan loans. Its owners face a difficult refinancing this year. Authorities should demand full transparency and a quick restructuring.  

Euro zone periphery trade is running out of gas

20 Mar 2014

Investors keen on a recovery story have been piling into assets in Spain, Italy, Portugal and Greece. Some periphery assets now look expensive. Further gains need two conditions to be satisfied – politicians enacting more reforms and companies growing profits. 

Portugal better choose stability over sovereignty

8 Jan 2014

Lisbon’s bond yields are falling. That raises the possibility it could follow Ireland in exiting its euro zone bailout. Yet markets may not stay gentle, and the challenges are tougher than in Dublin. Forget pride: a credit line from euro zone peers is still the best bet.  

Too soon to cheer Lisbon’s latest health check

4 Oct 2013

Portugal got a thumbs-up from lenders, but uncertainty over the outlook persists as it stumbles to the end of its programme. Investors are still antsy, growth is elusive and austerity has reached its limits. The country could yet turn into the euro zone’s biggest drag.

Portugal Telecom’s Oi deal is a good stepping stone

2 Oct 2013

The long-anticipated 5.6 bln euro merger of the Portuguese company with Brazil’s largest fixed-line operator creates a highly indebted enterprise, even after a capital hike. And claimed synergies are punchy. But teaming up makes sense in a consolidating Latin American market.

Portugal mess shows need for bailout rethink

3 Jul 2013

The crisis in Lisbon is a sign that the country’s acceptance of austerity has reached its limit. A serious debt restructuring, which would lighten the country’s burden, would be the only reasonable choice. Unfortunately the country’s sovereign creditors aren’t ready for it.