What was the best thing to happen to Portuguese debt this month?

Give up?

The Greek default and the subsequent triggering of the credit default swaps.

Since that point in time, Portuguese debt has rallied like a freight train, falling in yield from 14.07 on the 8th of march to 11.50% today.

Why? Because traders are able to hedge long positions via CDS market as well as trade the basis between the two markets.

Months ago, it appeared that CDS on sovereign bonds had been given a death sentence when Europe went out of its way to avoid a “credit event” in Greece. Once they allowed the market to function as intended in Greece, with no major casualties, the markets began to function again as designed.

Long story short, the Greek default helped breath new life into CDS and into peripheral sovereign debt as a whole.

h/t @credittrader