Portugal’s financial woes deepened on Tuesday as its borrowing costs rose to record levels after the ratings agency Standard & Poor’s (S&P) cut its rating to the brink of “junk” status.

Gary Jenkins, head of fixed income research at brokers Evolution, said the cut in the rating to BBB- “raised the probability” that the country would be forced to accept a bailout.

“This is one false step from being junked,” said Jenkins. “It’s very unlikely the market will be prepared to fund Portugal anytime soon.”

Portugal has a debt repayment due on 15 April and another in June. But the price the market is likely to demand from Portugal to raise fresh funds is expected to be too high for the country to finance itself without external assistance.

Yields – interest rates – on two-year bond hit a new high of 7.69% on Tuesday, while yields on 10-year bonds were at a record, and edging closer to 8.2%. Any price above 7% is regarded as unsustainable by analysts.

S&P said it was cutting the sovereign credit ratings on Portugal by one notch to BBB- and putting the country’s outlook on “negative” because of the problems it would face in financing itself. The BBB- rating is one notch above junk – and the further the country falls towards junk the higher its borrowing costs will be.

S&P’s BBB- rating is much lower than Moody’s A3 and Fitch Ratings’ A-.

S&P said that it felt likely that Portugal, whose prime minister José Sócrates resigned last week when the parliament failed to pass the austerity budget, would need assistance from the European financial stability facility (EFSF) and the European stability mechanism (ESM).

“Given Portugal’s weakened capital market access and its likely considerable external financing needs in the next few years, it is our view that Portugal will likely access the EFSF and thereafter the ESM,” S&P said.

“The negative outlook reflects our view that the macroeconomic environment could weaken beyond our current expectations and that a political impasse could undermine the effective implementation of Portugal’s adjustment programme, leading to non-negligible policy slippages,” the agency added.

“[We] assume that a new government will be formed by the end of the second quarter of 2011. We expect the next government will agree to further fiscal and structural reforms as part of an EU/IMF program.” Ratings agencies Portugal European debt crisis Financial sector Economics Global economy Europe Europe Jill Treanor guardian.co.uk © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds

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Jerusalem, Israel (TML) – Bassinets are wheeled in one after another into the maternity ward at Jerusalem’s Bikur Cholim Hospital – 42, to be exact, making it quite possibly the city’s largest assemblage on infants – and two-day old Chaya Rivka is one of them.

Little does she know that the hospital she was born in is facing financial woes that threaten to close its doors. Nestled in the heart of downtown Jerusalem on prime real estate, its historic buildings dating back to 1925 spread out over two city blocks, Bikur Cholim may be shuttered in a matter of weeks.

“There’s no question in the 21st century it is very hard financially to maintain viability of a hospital that has only 200 beds. We are in an era today of super hospitals, of leviathans that swallow up everything,” Raphael Pollack, the hospital’s medical director for the past eight years, told The Media Line.

Pollack said a principal reason for the hospital’s problem is the system of discounts exacted from the hospitals by the health maintenance organizations (HMOs). Hospitals pay 36% off-the-top to the HMO – an amount virtually equal to the deficit that threatens to close the hospital. On top of that, Bikur Cholim also has to contend with debt repayment.

Serving over one million people in the Jerusalem area, Israel’s biggest but second-poorest city, Bikur Cholim cares for some 60,000 patients annually. Its 700 administrators, doctors, nurses, technicians and cleaners also make it one of the largest downtown employers. One third of the physicians are Israeli Arabs, many of whom are currently doing residencies there.

“They told me that learning and training here was very good, and the department was good, so I chose to come here,” said Louay Taha, an Arab physician doing his residency at Bikur Cholim’s department of cardiology.

This community hospital is very much what its name implies: the Hebrew expression for the Biblical commandment and act of visiting the sick. Its primary clientele is the city’s ultra-orthodox and Arab populations. Bikur Cholim first opened in the Old City of Jerusalem in 1826, making it the ancient city’s oldest hospital.

But a series of financial issues threaten to end its generations of service as the only hospital located in the downtown area of the city.

“I think that in almost no civilized country would the government consider closing a hospital based on an operating deficit of $5 million. These are sums of money that can easily be raise,” Pollack said. “The last thing the government should be trying to do is closing a hospital that is outfitted and staffed. They’ll just have to build another hospital and that will be more expensive.”

Ilan Gur, director of Bikur Cholim’s neonatal and intensive care unit, told The Media Line that, “This hospital is in the middle of the town whereas all the other hospitals are on the outside of the real center. So there should be one hospital in there. No city in the world — a large city like Jerusalem — doesn’t have a hospital in the middle of town.”

According to Joseph Liebman, chief of the hospital’s emergency room, many people can’t get to the other hospitals in the periphery. Bikur Cholim hospital’s contribution to the people of Jerusalem was never more apparent than when victims of terrorist attacks during the second Intifada walked to the hospital for emergency care.

“If somebody’s life is in danger and they need immediate help, realizing that the brain only has six minutes before its too late, then 20 minutes is too late. It’s coming dead on arrival,” he said.

Arkady Gaydamak, a Russian-immigrant tycoon, purchased the hospital in 2007 for $32 million and provided another $5 million in the first year to cover its operating deficit. But he refused to put any more money into the institution, citing disagreements with the foundation he had set up to run the hospital and because his own personal financial situation changed.

Israel’s Health Ministry says its hands are tied and cannot come to Bikur Cholim’s assistance because it’s a private institution. In a statement, the ministry said it “is making great efforts in examining the option of partnership with other institutions.” Nevertheless, it said the deputy minister of health – an ultra-orthodox politician, Ya’acov Litzman – has expressed his opposition to its closing and has asked Prime Minister Binyamin Netanyahu to intervene.”

Pollack said he doesn’t accept the ministry’s explanation, saying that Jerusalem’s two other medical centers — Hadassah and Shaarei Zedek, also private institutions — receive government funding. Pollack said a proposal for the hospital to merge with another city medical center isn’t as simple as it seems and couldn’t probably be competed before Bikur Cholim’s time runs out.

Bikur Cholim’s downtown location is prime real estate, with luxury apartment towers arising on all sides of it.

But Jerusalem realtors who spoke to The Media Line said the legal status of the Bikur Cholim property is not clear. Moti Bodek, an architect who has worked for the hospital, said some of the hospital’s older buildings are designated for historic preservation and their value hinged on whether the buildings could be converted to another use and how. Nevertheless, realtors speculated that at least part of the land could be developed and that alone is worth in the tens of millions of dollars.

Yaakov Spigelman, a government official who was party negotiations with Gaydamak, told The Media Line that the agreement that gave him control over the hospital did not permit the facilities to be used for any other purpose for five years. It was stipulated that if Gaydamak sold Bikur Cholim, he would be subject to a penalty estimated at $500,000.

But Spigelman was unclear on whether Gaydamak could convert the property for sale in the real estate market, or how. But he indicated that there was room for negotiating a waiver to contractual stipulations.

Jerusalem’s other major hospitals, which are also running deficits, would enjoy extra revenue by taking the 6,000 births Bikur Cholim now performs each year and its 130 neo-natal cases – more than either Hadassah Ein Karem or Hadassah Mt. Scopus.

The threat of closure is compounding Bikur Cholim’s problems as nurses and other key employees seek work elsewhere. As it is, there is a national shortage of nurses and therefore job openings at the hospital are hard to fill, which has forced the hospital to cut back services.

“I’m not sure that next month I will get paid or not,” Nurse Anna Guberevsky explained. “It was very nice to work here, but because of all sorts of financial difficulties I’ve decided to leave and have already found another place to work.”

Currently, there isn’t enough cash flow to pay salaries and there have been salary cuts of 30%.

Pollack says, “We’ve reached the end of the road to the crisis. There has to be a solution here and now. Because without a solution we are just going to have to close our operating rooms, close our delivery rooms, and all the workers, whether they wanted to accept the pay cut or not, will have to go home.”

Eliana Rosenwasser, Chaya Rivka’s mother, chose Bikur Cholim because she wanted to be close to home while in labor. “It wasn’t such a long ride in the taxi from my home to Bikur Cholim to have my baby. It is really nice.” She may not have that option next time.

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London, England, United Kingdom (AHN) – Britons had a heyday swiping their credits cards while doing their Christmas shopping. Reports estimate the total amount of credit card purchases for gifts, food and drinks at $2.85 billion (GBP 1.9 billion).

However, another $225 million (GBP 150 million) was expected to be spent on Boxing Day, bringing the total credit card bills due by early 2011 to $3.075 billion (GBP 2.05 billion).

Including cash and online purchases, analysts estimate post-Christmas and early 2011 spending will hit $33.75 billion (GBP 22.5 billion), which would register a 20 to 25 percent increase in sales. The rise in sales is also attributed to pent-up demand after a number of shoppers failed to go to the malls prior to Christmas because of the heavy snowfall and transport crisis.

Experts fear that the record yearend holiday spending could result in a record number of insolvencies to be filed, prompting a major consumer credit counseling group to appeal to consumers to use their credit cards wisely.

There is speculation the high volume and amount of purchases may have been done deliberately to beat the hike in value added tax to 20 percent from 17.5 percent by Jan. 4. A consumer website confirmed that one-third of shoppers admitted purchasing items ahead of schedule to beat the VAT increase. But because of the high interest rates on credit purchases, particularly for 12 percent of Briton consumers who pay only the minimum monthly, any savings from the VAT hike would be eaten up by interest charges.

Yearend holiday purchases would add to the worsening debt situation of Britons. According to Bank of England figures, consumers owe a total of $87 billion (GBP 58 billion) on credit cards and another $235.5 billion (GBP 157 billion) on unsecured loans and overdrafts. To compound their financial woes, 100,000 public servants are expected to be laid off in early 2011.

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