The current debt crisis' of Greece and Ireland have brought attention to the unsustainable debt levels of its member nations, Portugal and Spain.
The Financial Times is reporting, via an unidentified source, some European Union member states are pushing Portugal to seek aid in an attempt to avoid the fifth largest country in the European Union, Spain, from having to do the same.
A lingering recession, low growth, and a burgeoning fiscal gap expected to be 4.6% of gross domestic product this fiscal year has sparked growing skepticism in Portuguese bond markets. Yields, already near record highs, climbed higher today as investors expect higher gains for an increasingly risky investment.
Portugal, according to the unnamed source within the the Germain Finance Ministry, is being pushed to request aid as such a move would bolster Spanish markets and banks which are heavily exposed to Portuguese public debt.
Comparison of debt in countries with the Euro as currency
Portugal has denied the claim they are being asked to seek aid, calling the reports "totally false" and stating, "There has been no pressure on Portugal to ask for assistance and we have no need to ask for a financial rescue." Spain and Portugal have passed austerity measures they hope will alleviate the market sentiment they will be the next to succumb to the growing sovereign debt crisis within the euro zone.
Assurances from the Portuguese government and spokesman for the European Union have done little to to stop the growing sentiment that Portugal has already gone past of the point of saving. "I think Portugal has already crossed the point of no return ... The market is now watching whether Spain will need a rescue," said a Japanese bank foreign exchange trader.
Ireland and Greece are the only two European Union states to seek aid moves which shook international markets fearing a debt crisis. It is unclear at this time what effect a request for aid from Portugal could have on international markets.