Goldman Sachs Projects that Portugal will be Last European Bailout

Goldman Sachs is telling clients in a newly-released note that it sees Portugal being the last European nation to seek a bailout, following Greece and Ireland.

Francesco Garzarelli, Goldman Sachs's chief interest-rate strategist said that “We do not expect any other EMU sovereign to be in need of financial assistance."

While Goldman Sachs doesn't expect any “principal impairment” for bonds sold by Ireland and Portugal, “a ‘voluntary' extension of the maturity profile of Greek debt is likely.'”

According to a Bloomberg report, "Portugal is aiming for a package that may be worth as much as 75 billion euros ($107 billion), two European officials with knowledge of the situation said. Bond yields have surged since Socrates offered to resign on March 23 after parliament rejected proposed budget cuts."

The bonds of “outer peripheral” countries “are likely to remain volatile and less liquid as they are removed from bond indices and fixed-income mandates,” Garzarelli said.

Spreads between the yields of Italy, Spain, Belgium and those of AAA- rated economies “will slowly compress,” he said.

Goldman Sachs also projects that The European Central Bank will remove the rating threshold for Portuguese debt.