Brazil may buy Portuguese bonds

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Brazil is considering buying Portuguese sovereign bonds so as to help out its former indebted colonial ruler, Brazilian President Dilma Rousseff said in comments published Wednesday.

"We are studying the best way to play a part in the recovery of the Portuguese economy," Rousseff told the daily Diario Economico.

"Our teams are in permanent and flexible dialogue on this question. One possibility is the purchase of ... Portuguese sovereign debt," he told the economic newspaper.

Portugal is in the midst of a political and economic crisis after the government of Prime Minister Jose Socrates failed last week to get support for the latest series of spending cuts to trim the public deficit and so avoid following Greece and Ireland in seeking an international bailout.

International ratings agencies slashed Portugal's ratings after Socrates' government resigned while the cost to raise new funds via government bond sales to cover Portugal's maturing debt has reached record highs.

Rousseff said in the newspaper article that Brazil was also considering "other alternatives," including an early repurchase of Brazilian bonds already held by the Portuguese government.

"Portugal is a very important country for Brazil. It's our gateway to Europe," she said.

© 2011 AFP

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