Portugal obtains record negative interests in short-term auction

  • ECO News
  • 21 June 2017

The Portuguese Treasury raised 1,250 million euros in three and 11 months' securities with even better rates, after Fitch opened the doors for an increase in the Portuguese debt rating.

Portugal was able to get record negative interest in this morning’s short term double auction. Overall, the Portuguese Treasury raised the 1,250 million euros in three and eleven months’ securities. These more favorable financing conditions emerge after Fitch opened the door for a possible improvement in the Portuguese debt rating, which is currently in the “junk” status.

This Wednesday, the IGCP (Portuguese Debt Management Agency) placed in the market 1,000 million euros worth of 11 months’ Treasury bills at an average interest rate of -0.264%, which is comparable to the -0.135% rate in April’s auction. Demand surpassed supply 1.79 times, which allows the country to improve its financing conditions.

On the three-month auction, rates have also been more negative: Portugal obtained a -0.337% interest to raise 250 million euros in debt securities for that maturity, which compares with the -0.266% rate from the previous auction. The Treasury also noticed a strong demand from the market, with purchase orders standing 4.5 times above what was being auctioned.

This financing operation takes place at a very favorable time for Portugal, because it follows the good economic momentum the rating agency Fitch emphasized in the end of last week when it improved the country’s outlook from “stable” to “positive”; this decision means Portugal could leave the “junk” status.