BES investors lose spirit as panic spreads

A rapid loss of faith in the health of Portugal’s Banco Espírito Santo quickly spread to other jurisdictions and asset classes on Thursday, as investors panicked over contagion risk and flipped out of subordinated bonds across jurisdictions. But the knock-on effects for the broader markets are likely to be limited and temporary, even if holders of the bank’s subordinated debt could be at risk of bail-in, writes Graham Bippart.