Portugal raises 1.12 bn euros, rates lower or flat

16th November 2011, Comments 0 comments

Portugal paid lower or unchanged rates to raise 1.12 billion euros ($1.51 billion) in short-term funds on Wednesday at a time of continued tensions over the eurozone debt crisis.

The Portuguese debt management agency said it sold 773 million euros in 3-month Treasury bills at a yield or rate of return of 4.895 percent, down from 4.997 percent at the last similar sale on November 2.

It also sold 350 million euros in 6-month bills at 5.250 percent, unchanged from an October 19 auction.

The government, desperately trying to balance the public finances even as the economy shrinks badly, had been seeking to raise up to 1.25 billion euros at the sale.

Analysts said the sale was unremarkable but still showed that Portugal had to pay high rates to investors in order to raise fresh finance, reflecting concerns over the country's and the eurozone's overall outlook.

"There is not much new to say" about Wednesday's sale, said Filipe Silva, bond strategist with Carregosa bank.

"The truth is, however, that we continue to pay very high rates for short-term debt which shows that the risk seen in Portugual has not gone down," Silva said in a note.

The fund raising was achieved despite tensions on eurozone bond markets, with rates for Italy and Spain jumping to dangerously high levels, while other member states -- with the notable exemption of bloc powerhouse Germany -- all having to pay more to get fresh finance.

Portugal had to be bailed out in May with a 78-billion-euro debt rescue package put together by the European Union and the International Monetary Fund in return for a stinging series of austerity measures which have proved hugely unpopular.

© 2011 AFP

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