Portugal borrowing costs ease at short-term debt sale
Portugal raised Wednesday 2.5 billion euros ($3.2 billion) in short-term debt at lower rates of interest in the first sale since Standard and Poor's downgraded the country's credit rating last week.
With S&P putting Portugal in speculative investment or junk bond status, Lisbon still managed to sell 11-month bills at a yield of 4.986 percent, down from 5.902 percent at the last similar sale in April 2011, the IGCP government debt agency said.
Portugal also raised 496 million euros in 3-month bills at a yield of 4.346 percent, mostly unchanged from a recent similar operation, and 754 million euros in 6-month bills at 4.740 percent, down from 5.250 percent.
Demand was strong, exceeding the offer by a ratio of between 2.1 and 4.1, the debt agency said.
“The result is globally positive,” analyst Filipe Silva from Carregosa Bank said. “These short term debt auctions have not suffered from the Portugal downgrade last week.
“The biggest problem is issuing debt of more than a year. Portugal doesn’t yet have the conditions to return to the markets,” he added.
Late Tuesday, the yield on Portugal benchmark 10-year debt reached 13.564 percent on the secondary markets, way about the 6.0-7.0 percent level considered to be the upper limit for raising long-term funding.
— With Dow Jones Newswires —