Why Bond Investors Might Want to Take a Closer Look at Portugal
- Left Bloc emerged as third force in Sunday's election
- Party's rise may complicate efforts to form stable government
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The election victory for Portuguese Prime Minister Pedro Passos Coelho last weekend was hailed by pundits as a triumph for austerity and perseverance over Greek-style upheaval. Investors might need to look a little closer at the result.
The third-biggest force in parliament is now the Left Bloc, which more than doubled its seats in the 230-member legislature to 19. It came mainly at the expense of the Socialists, who broadly supported the budget-deficit reduction that helped Portuguese bonds rally and the country become southern Europe’s oasis of stability after exiting its international bailout last year.