By Austen Sherman
Portugal doesn’t present the risk of default that Greece does to the rest of the European Union because officials there are seeking to contain the nation’s financial crisis, according to Fitch Ratings.
“The government there is committed and credible. The economy is highly indebted, but they are working on organizing a debt-for-equity swap,” David Riley, head of the sovereign-debt unit at Fitch Ratings, said at a conference in New York today. “That is the right strategy and in the near term we don’t see them as a significant risk to the rest of the euro zone.”
Comment: What matters with a sovereign debt crisis are not the current indicators but the degree to which the government confronts the challenge and implements an adequate response. Greece still fails at that. Italy, Spain, Portugal, Ireland pass this test.
Portugal's maturity profile: