Portugal gets record negative interest after no longer being “junk”

  • ECO News
  • 20 September 2017

IGCP went to the market for the first time after S&P's decision to take Portugal from the junk status. In the double auction of short-term debt, Portugal got record negative interests.

IGCP (Portuguese Debt Management Agency) went to the market for the first time since Standard & Poor’s decided to remove Portugal from the junk status. In the double auction of short-term debt, Portugal got record negative interest to obtain 1,750 million euros.

Portugal placed a larger portion of the 1,750 million euros in 12-months securities, a maturity which got a -0.345% rate, a more negative interest than the -0.259% from the last operation with the same maturity, performed on July 19. The demand for this maturity was 2.1 times larger than the supply.

"The country was able to get the smallest rates ever for these maturities and both were, once again, negative. This was expected after S&P increased Portugal’s rating and Moody’s improved the Republic’s outlook.”

Filipe Silva

Banco Carregosa

In the six month maturity, in which IGCP placed 500 million euros (demand was 2.83 times higher than the supply), the rate was equally the lowest ever: it decreased from -0.292% to -0.363%.

Portuguese ten-year interests decrease

These negative interests follow the tendency from the last Treasury bills’ auctions performed by IGCP. But this fall to even more negative ground reflects the upwards revision of the country’s rating from S&P. The rating agency took Portugal away from the “junk” level, from BB+ to BBB-.

“In this operation, the country was able to get the smallest rates ever for these maturities and both were, once again, negative. This was expected: after S&P increased Portugal’s rating and Moody’s improved the Republic’s outlook, the Portuguese long-term debt shrunk and the short-term debt is having the same behavior. Therefore, it is not strange that the maximum amount was issued”, stated Filipe Silva, Banco Carregosa’s assets management director.

PUB