Portuguese treasury wants to postpone debt repayments, from 2020 to 2028

  • ECO News
  • 30 January 2019

Increasing the Portuguese debt repayment terms of maturity has been one of the main strategies of the IGCP. This is the first operation of this kind to take place in 2019.

The Portuguese Treasury and debt agency (IGCP) returns to the debt market this Thursday for a debt swap operation. Portugal wants to repurchase treasury bonds (OT’s) which would reach maturity next year, and it offers, in return, treasury bonds maturing on October 2028.

“Next January 31, the IGCP will go to the debt market, at 10:00 AM, for a debt swap operation, to repurchase PTOTECOE0029 treasury bonds maturing in 2020”, the IGCP announced, this Wednesday.

These debt swap operations have been part of Cristina Casalinho’s strategy while heading the IGCP. Over the next two years, Portugal has to pay the amortization of the bonds maturing in 2020 (€21 bn in 2019 and €9bn in 2020). The Portuguese treasury has been delaying the debt repayments with debt swaps and debt emissions of longer maturity bonds.

The last operation of this nature occurred by December 5, and at the time the Portuguese treasury decided to place €1.9BN in treasury bonds maturing in 2023 and 2027. In exchange, the IGCP bought back €1.036 billion euros of bonds due to mature on 15 June 2020 and €870 million in bonds due to mature on 15 April 2021.

At the time, the IGCP noted that the aim of this operation was to reduce the state’s interest payments and extend the maturity of its debt burden.

Besides this debt swap, the IGCP has also been issuing debt with longer maturity levels, with new loans stepping up to maturity term at an average of 10.3 years in 2018, against the 7 years average registered in 2017. Portuguese debt maturity is now at 7.8 years, according to January’s IGCP data.