Portugal tries to repurchase debt, offering five-year bonds
Just as it has been happening for the past few years, IGCP will return to the market to repurchase bonds maturing over the next three years. In exchange, IGCP offers bonds maturing in five-years.
IGCP (Portuguese Debt Management Agency) will move forward, this Wednesday, with a plan to repurchase Treasury bonds maturing in the next three years, offering investor five-year bonds in exchange. This plan means the agency headed by Cristina Casalinho is trying to reduce the debt reimbursement needs until 2020, placing new bonds in the market which have a longer maturity, namely in 2022.
“Portuguese government debt agency IGCP plans to hold a bond exchange offer at 10 a.m. on Aug. 30”, the agency states in a press release.
As a counterpart, IGCP will sell investors bonds which mature on October 17th, 2022. For each bond line it attempts to purchase, the agency managing the Portuguese public debt says the operation (buying market notes and selling new bonds) will have a “neutral” impact. This means there are no losses nor gains, neither for investors nor to IGCP.
Portuguese government debt agency IGCP plans to hold a bond exchange offer at 10 a.m. on Aug. 30.
The bonds the Agency aims to repurchase were issued between 2008 and 2010, which means they all have 10 years maturities (2018, 2019 and 2020).
In practice, by making this exchange, IGCP is aiming to extend the maturity of the Portuguese public debt, in an effort to smooth the amounts they will reimburse the market over the next three years: around seven billion euros in medium-term bonds must be returned in 2018, while reimbursements increase to approximately ten and eleven billion euros in 2019 and 2020, respectively.
This month, Portugal made a new early reimbursement to the International Monetary Fund (IMF). The Portuguese Debt Management Agency repayed around 800 million euros to the Fund, meaning that now, Portugal only owes 37% of the loan granted by IMF concerning the 2011 bailout.
