Portugal's bailout will probably happen before Christmas, and they will ask for 60 BB from the EU and IMF

We said earlier that Portugual could go tin cup in hand to the EU as soon as this week.  Now, market experts are saying something similar.  They say it will likely happen by the end of the year. 

If it weren't for the ECB buying more Portugal bonds, and reducing the spread, it would have already happened.  Via Reuters:

"It is very likely that they will ask for a bailout -- maybe before Christmas depending on market developments in the next days," said Juergen Michels, euro zone economist at Citigroup.

If needed, Portugal, like Greece and Ireland, could get a 3-year plan of loans with an interest rate similar to Ireland -- 5.7-6.0 percent, economists and euro zone sources said.

The need for a rescue appeared less urgent on Friday as spreads of Portuguese bonds over benchmark German paper fell thanks to European Central Bank purchases of Portuguese bonds on the secondary market.

If markets force Portugal to ask for help, the money would come from the European Union and the IMF in similar proportions as for Ireland and Greece -- two thirds from Europe and one third from the IMF, one euro zone source said.

According to the Portuguese 2011 budget, next year's net financing needs are 10.75 billion euros, with the budget deficit seen at 10.5 billion euros.

Those two figures add up to nearly 37 billion euros although a three-year financing deal would have to cater for further deficits in 2012 and 2013, which are difficult to estimate precisely at this stage.

Economists also speculate that Portugal could get some kind of stand-by facility, which would suffice to calm markets, but which may never be actually used by Lisbon.

"I think Portugal will have some facility similar to Ireland, something similar to a stand-by arrangement. Something that the government could draw on if needed and maybe banks as well," said Anke Richter, credit research director at Conduit Capital Markets in London.


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