LISBON-Borrowing rates for Portugal briefly spiked yesterday after reports over the weekend that Germany and France are pushing it to accept outside help to keep the debt crisis in Europe from spreading. The yield on Portuguese 10-year bonds, a key gauge of investor sentiment, rose to 7.18 per cent at one point, its highest since the adoption of the euro and a potentially unsustainable level, before falling back to 6.94 per cent. Portuguese officials have sought the help of China, which has already used its foreign currency reserves to buy Greek and Spanish debt and help stabilize those nations.
The finance minister of Portugal went to China twice late last year, and Chinese President Hu Jintao promised in November to help Portugal out of its financial crisis. Beyond that, discussions between the two nations have been secretive. Openly accepting the help of the International Monetary Fund or other European nations, on the other hand, is a less politically palatable option for Portugal's leaders because it would be seen as an embarrassment and a failure.