Portugal Contagion Spreads

Despite reassurances from US asset-gatherers and TV 'personalities' that Portugal must be fixed (because US equities are up), it is anything but. Today's triple whammy from the 'recovered' Portugal starts withBanco Espirito Santo bonds and stocks hitting new record lows (down over 10% more on the day). The contagion has rippled across to Rioforte, which controls Grupo Espirito Santo's non-financial arm - and is likely to default on a EUR 847 million payment to Portugal Telecom. And just to add further salt to that wound, Portuguesebusiness lending in May collapsed at a record pace (down 8.23%). But apart from that, yeash Portugal is all fixed and their sovereign bonds are worth every penny...

Step 1 - Banco Espirito Santo bonds and stocks continue to collapse...

Step 2 - The Contagion spreads to the rest of Portugal...

• Rioforte, which controls Grupo Espirito Santo’s non-financial arm, is likely to default on 847m-euro payment due to be made to PT today, Folha de S.Paulo reports, without saying where it got the information.
• Payment is part of 897m-euro debt to PT
• Negotiations are still underway
• Rioforte has been trying to sell assets over last few days to enable it to make the payment
• Co. has potential to raise 300m euros from sales of assets, including Tivoli hotel chain
• Rioforte, PT seek solution to enable loan payment, without changing terms of merger w/Oi
  Zero

Step 3 - Credit Creation is collapsing as business lending plunges by its most on record...

*  *  *

But apart from that Portugal is fixed

Credit to Zero Hedge