Market ills test Portugal’s resistance

With no sub-prime problems, real estate bubble or complex credit portfolios to worry about, the country’s banking sector should be a relative safe haven. But while investors remain receptive to their covered bonds, banks are finding liquidity scarce. Peter Koh reports.

GRAFFITI NEAR THE Moorish Castelo de São Jorge that overlooks Lisbon’s Baixa district and waterfront bluntly invite tourists who don’t appreciate what Portugal has to offer to go to Spain instead. The writing on the wall is revealing of how the Portuguese find it hard to escape comparison with the only country with which they share a border. The Portuguese economy used to suffer from comparisons with its neighbour, which has enjoyed decades of far faster economic growth.

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