Debt-ridden Spain and Portugal face new threats to credit status
Clouds are gathering over the Iberian peninsula. Attention is shifting from Greece, given temporary respite by the EU-IMF bailout, to Spain and Portugal as fears mount over their fiscal deficits and spiralling unemployment figures.
Bond investors continue to tread with caution in allocating funds to Spain and Portugal; unsure if growth has returned, hidden debts are yet to reveal themselves or whether the two countries will introduce the tough austerity measures that are needed.
Investors who were used to treating Eurozone sovereigns as a uniform entity from a risk perspective are having to swiftly revise their approach and factor in different levels of risk weighting for the endangered southern European peripherals.
While
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