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Portuguese report
by Euro Reporter
2012-06-01 10:50:26
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Portugal’s asset sales draw foreign bids, boutique firms

The factors forcing Portugal to seek a bailout in 2011 have triggered a wave of mergers, acquisitions and government disposals in the country as it prepares to sell more assets such as flag carrier TAP SGPS SA. Mergers and acquisitions in the first quarter rose to 6.1 billion Euros ($7.6 billion), extending one of the strongest deal streaks in almost two years, according to Bloomberg data, buoyed by the government’s sale of state-owned assets and a series of takeover bids. Brazil’s Camargo Correa SA expects to register its 2.5 billion-euro bid for Cimpor-Cimentos de Portugal SGPS SA in the coming days, said an official speaking for Camargo, requesting anonymity in line with company policy.

“Although the merger and acquisition activity is temporary, I expect it to continue this year at least until the sale of TAP and airport operator ANA is concluded,” Jose Gabriel Chimeno, a partner in Lisbon at consulting firm Deloitte, said in a May 25 interview. There’s an “opportunity to buy assets that were not for sale in the past,” he said. Last year, Portugal became the third euro-area country after Greece and Ireland to request a bailout from the European Union and the International Monetary Fund. As part of that aid package, the government agreed to sell stakes in companies including the biggest utility and the energy grid operator, while banks have to deleverage and boost capital ratios.

The country received many indications of interest for TAP, Maria Luis Albuquerque, secretary of state for treasury and finance, said on May 25. There will be “very significant” demand, Albuquerque said, for the carrier and airport manager ANA-Aeroportos de Portugal SA, which are set to be sold by the end of the year. The country also plans to sell the freight branch of rail service operator CP-Comboios de Portugal SA and postal operator CTT-Correios de Portugal.


Portugal municipalities to get 1 billion Euros for debt

Portugal’s government will approve a 1 billion-euro ($1.3 billion) credit line to municipalities to help them repay short-term debt to suppliers, said Miguel Relvas, the country’s minister for parliamentary affairs. “The credit line, with a total value of 1 billion Euros, aims to inject money into the local economy,” Relvas said at a news conference in Lisbon today after meeting the president of the country’s association of municipalities, Fernando Ruas.

Ruas said in an interview on March 21 that Portugal’s municipalities hold as much as 9 billion Euros of debt and may face default unless the government provides aid soon. Portugal is also encouraging local administrations to merge as part of a plan to save money and comply with the terms of a 78 billion-euro bailout from the European Union and the International Monetary Fund. In return for the credit line, local governments have promised to cut back on spending, control their short-term debt and pay suppliers on time or risk facing sanctions from the central government, Relvas said.

“I want to underline that local governments will not stay on the sidelines of the adjustment effort imposed on all the Portuguese people,” Relvas said.  The southern European country’s municipalities face similar issues to those of Spain, whose regions and municipalities have been shut out of capital markets. Spain’s government is offering them loans to help pay suppliers.


Bank of Portugal says clients have ‘high’ confidence in banks

Bank of Portugal Governor Carlos Costa said customers in the country have “high” confidence in financial institutions and in the financial system. There has been “high” growth in bank deposits by individuals, Costa said in a report released today about banking supervision.

“The fragility of the internal economic situation, characterized by a high level of unemployment, raises important risks for the balances of families and companies, and requires growing attention from the Bank of Portugal,” the report said.

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