Portugal issues 632 million on 10-year maturities. Demand doubles supply

  • ECO News
  • 10 May 2017

The IGCP raised 1,250 million in five and ten-year maturities. On the ten-year auction, it payed 3.386%, a higher rate than the last comparable issuance in August 2016.

In the first ten-year debt auction in 2017, Portugal payed higher interests to raise 632 million euros in the market. The operation had a 3.386% rate, higher than the amount payed in the last comparable issuance, which happened in August 2016. As for the five-year auction, the country’s financing costs decreased. The demand for both lines was double the supply.

Overall, the Portuguese Treasury achieved its goal: to raise 1,250 million euros with the operation, assuring half of this year’s financing with bonds.

In spite of the increase in the ten-year auction rate, the result of the operation continues to be more favorable to Portugal, considering the interests the IGCP was getting since the beginning of the year and in shorter maturities. For example, to sell seven-year bonds, the agency payed 3.668% last February. Now, it pays less to sell 632 million euros in ten-year securities.

As for the five-year auction, 618 million euros were sold with a 1.828% interest, below the 2.174% it payed in the previous month.

In both lines, Portugal had a strong interest from the market, such as analysts anticipated. Demand doubled the supply, a circumstance which decisively contributed to the decrease in financing costs.

Interests increase in comparison to previous auctions

Source: IGCP (Portuguese Treasury and Debt Management Agency).