Portugal to tell EU in May if it wants bailout exit support

Portugal will tell euro zone finance ministers on May 5th if it wants a precautionary credit line from the euro zone bailout fund ESM to ease its return to markets, a senior EU official said today.

Portugal will exit its €78 billion bailout programme on May 17th. Ireland, which exited its bailout late last year, decided not to apply for a credit line because its borrowing costs on the market were low enough on a wave of renewed investor interest in euro zone periphery bonds.

The official indicated that with bond markets being so optimistic, Portugal might decide not to apply.

“We are all profiting from great optimism in markets. One needs to make use of the very favourable conditions,” the official said.

If Lisbon were to ask after all, the application would take several weeks to process as it would have to get parliamentary approval in several euro zone countries, including Germany.

“It is a lengthy process, which takes a couple of weeks, but, as the name precautionary suggests, there is no sense of urgency around it,” the official said.

A second official taking part in the preparations for the meeting of finance ministers on May 5th, said that given Portugal’s recent successful bond auction, a cash buffer and good economic performance, a request for a credit line was unlikely. (Reuters)