Portugal gets a 17 billion demand for ten-year debt, the rate will stand at 2.06%

  • ECO News
  • 10 January 2018

Portugal is making a ten-year debt issuance by means of a banking syndication. Demand exceeded 17 billion euros and the final interest rate stood just above 2%.

Portugal’s premier in the debt market in 2018 highlighted the strong appetite from investors for Portuguese bonds. The syndicated issuance registered purchase order surpassing 17 billion euros, according to Bloomberg. The final rate should stand slightly above 2%. It is still not certain how much IGCP will raise in total, but last year, in a similar operation, it got three billion euros.

Currently, according to data from Bloomberg, the ten-year swap rate stands at 0.92%, and the first orders reveal that investors are demanding a 120 basis-points’ premium. With the closing of the order book, the premium decreased to 114 points. The same is to say that IGCP should pay a 2.06% rate.

This rate can be positively compared to the 4% rate payed last year, in an identical issuance. On January 11 of 2017, the Portuguese Treasury raised 3,000 million euros in securities maturing in ten years, and for which it paid a 4.227% interest rate. Since then, Portuguese debt interests have sunk in international markets because of the positive signs of the Portuguese economy and an upward rating revision from S&P and Fitch, both removing Portugal from the “junk” category.

Portugal resorts, as usual, to a banking syndicate to carry out the first financing operation of 2018, opening a new line of bonds that will mature in ten-years. Barclays, Citigroup, Crédit Agricole, Goldman Sachs, JPMorgan Chase and Novo Banco have been chosen to place these securities maturing in October 17, 2028, and will get to the market with a Ba1/BBB-/BBB rating.

The amount that will be raised by IGCP will be soon announced, according to Bloomberg. Analysts from Commerzbank, who had anticipated this syndication, pointed to an amount standing between 3,000 and 3,500 million euros, in line with last year’s syndicated operation.