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"The ongoing CreditWatch placement reflects our view that Portugal remains a potential recipient of funding," said Eileen X. Zhang, a credit analyst at S&P. S&P said Portugal faces a number of financial difficulties at a time when the country is expected to slip back into recession
-- its external financing needs are still well above 200 percent of its current account receipts for 2011, its banks are heavily dependent on handouts from the European Central Bank and many government-owned businesses face big liquidity pressures. The agency said the Portuguese government would need to approach its European partners for a bailout this year if it continues to face difficulties raising the financing it needs, partly to avoid an even more severe economic contraction than already forecast. So far, Portugal is getting by, raising the money it needs but the costs are high. Earlier Wednesday, it raised euro1 billion but the interest rates it has to pay remained stubbornly high. The government debt agency said it sold euro450 million in 11-month bills and euro550 million in 6-month bills Wednesday. Demand for the longer-term bill was more than three times the amount on offer, while the shorter term loan was oversubscribed 2.6 times. Portugal is paying 4.057 percent on the 11-month bills, up slightly from 3.98 percent in a sale of 12-month bills last month. The six-month bills went for 2.98 percent, the same as in February.
[Associated
Press;
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