Portuguese government bonds plunged Thursday after the collapse of the country’s government heightened speculation the nation will be forced into accepting a bailout from the European Union and the International Monetary Fund.

Market participants are nervous about Portugal’s ability to meet EUR4.899 billion of bond redemptions in June.
However, the country is widely expected to have enough cash to meet EUR4.227 billion in bond redemptions plus additional coupon payments in April, after it made progress cutting its deficit and raised funds through a bond syndication last month.

Portuguese Prime Minister Jose Socrates resigned Wednesday after the country’s parliament rejected a new government austerity plan. Under Portuguese law, an election can be held no less than 55 days after it has been called.

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