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Portugal borrows two bn euros at lower rates: Treasury

Portugal raised two billion euros ($2.5 billion) via six- and 12-month debt auctions on Wednesday at lower rates, the Treasury and government debt agency said.

A six-month issue raised 750 million euros at 2.292 percent, lower than the rate of 2.653 percent paid during the last comparable operation on June 6.

Portuguese authorities borrowed another 1.250 billion euros for 12 months at 3.505 percent, compared with 3.834 percent the last time around.

Portugal is only able to access short-term capital markets as it tries to get its finances in order with the help of a 78-billion-euro rescue package drawn up by the European Union and International Monetary Fund.

On Tuesday, officials from the European Commission and IMF said that the country could still reach its 2012 budget deficit target but warned that the risk of failure had grown significantly.

The goal of reducing Portugal’s public deficit to 4.5 percent of gross domestic product this year might be hampered by a large drop in tax revenues in the slowing economy, the European Union’s executive arm said.

Meanwhile, investors have flocked to safe haven investments, a boon for Germany as it can now borrow money at negative rates, which means it is being paid to borrow.

On Wednesday, the yield or rate on the auction of two-year German debt was a record low of minus 0.06 percent, the Bundesbank, which organised the auction, said in a statement.

– Dow Jones Newswires contributed to this story –