A Portuguese bailout is almost certain, but markets have already priced such an event in and are unlikely to move sharply following a rescue, Stephane Deo, Head of European Economic Research at UBS told CNBC.
Not all Portuguese stocks would suffer as a result of a bailout, but investors were very bearish, according to Deo.
"A bailout is very, very likely. I'm not sure it will happen very soon, because without the PM (Prime Minister) to negotiate the bailout obviously it will probably be postponed, but the bailout is now by far the central case scenario, not to say certain," he said.
"This being said, not all the stock in Portugal would be impacted by that and you have to disentangle some of that stock," Deo added.
UBS, which published an equity report on the subject and did the same for Spain recently, said there were big concerns about the Spanish banking system.
"We are extremely worried about the banking system in Spain. I think our bank team is probably one of the most bearish, but there is other stock which will lose some value," he said.
Deo said two bonds totalling 9 billion euros were due to mature by June, raising the issue of whether the Portuguese government would be able to pay them back.
"The question is do they have enough cash now to repay this bond, and the answer is: we don't know because we don't have official data on the cash that the government has," he said.
However, he said he believed Portugal would be able to repay the bonds and delay a bailout until after elections in June.
"Our numbers suggest that actually they would probably be able to do that, which means that you can postpone the need for external funding and external support until the beginning of June, which is more or less when the new Prime Minister should come into power."
Fiscal consolidation was no longer an option in the country, but a necessity, Deo said. "It will happen because the Portuguese do it, or because you call the IMF and the IMF force them to do it, so there's no alternative to this kind of deficit."