Portugal gets 1,000 million euros with record negative interests
As expected, Portugal registered record negative interests to raise 1,000 million euros in three to eleven months' Treasury bills.
As it was expected, Portugal registered record negative interests to raise one billion euros in three to eleven months’ Treasury bills. The result of this Wednesday’s two auctions confirms the financing tendency in the Portuguese Republic in 2017, of negative interests.
In both lines, IGCP (Portuguese Debt Management Agency) got negative interests lower than in the last comparable auction. In the three-months maturity line, the average interest rate was -0.348% for the market to absorb 250 million euros — which compares to the -0.337% rate from June’s auction. As for the 11 months’ maturity, in which Portugal raised 750 million euros, the interest rate decreased to -0.291% in comparison to the previous auction’s -0.264%.
All in all, the agency managing the Portuguese public debt complied with its goal: it intended to raise between 750 and one thousand million euros in the double auction, which places the final result in the maximum amount of the goal. Investors’ demand was particularly helpful, since it was 3.48 and 2.45 times more than the offer for three and 11 months’ bills, respectively.
Portugal has been registering negative interests since 2016. And this year, all short-term auctions from IGCP had negative interest rates, which means investors are paying Portugal to hold debt that matures in three to 12 months’ time.
This is a result not only from the external circumstances, with ECB as the main protagonist, but also from internal circumstances such as the favorable economic indicators of the country’s risk improvement, namely: a better deficit than Brussels’ goal; leaving the Excessive Deficit Procedure and the 2.8% growth in the first and second quarter of this year, in a time when an improvement in Portugal’s rating is expected, to a speculative investment level.
Last year, IGCP raised more than 16 billion euros in short-term debt securities, for which it paid a marginal rate of 0.02% — almost zero. In 2017, this rate should decrease to negative numbers.
