Portugal to issue 10Y-26Y bonds

  • ECO News
  • 7 July 2019

The Portuguese treasury and debt management agency (IGCP) has announced a double auction for 10Y and 26Y government bonds that will take place next Wednesday.

Portugal is going to issue long-term debt in a moment when medium-term bonds (up to 7Y) are now negotiations with negative yields at the secondary market. The Portuguese treasury and debt management agency (IGCP) has announced a double auction for 10Y and 26Y government bonds that will take place next Wednesday.

“On the 10th of July at 10:30 a.m. (11:30 a.m. CET) IGCP, E.P.E. is going to auction the Portuguese Government Bonds maturing on June 2029 (OT 1.95% 15Jun2029) and on February 2045 (OT 4.1% 15Feb2045) with an indicative global range amount of EUR 1000 million to EUR 1250 million.”

This auction follows the strategy of prolonging the bonds’ maturity, despite some considering it a risk. The President of Agency, Cristina Casalinho, defended this week in Parliament that it is possible to “issue 30Y bonds at yields of 1.5%”. Thus, Casalinho considers “there is significant leverage to extend maturities”.

However, Cristina Casalinho also noted that “for that to happen, we are going to need demand and we are not sure if there is going to be any”. Usually, long-term investors are pension funds, insurers that are necessarily more exigent in terms of risk assurances, but there are not very common profile among the typical Portuguese government bonds’ investors, she admitted.

61% of the total investors can trade at the secondary market (125.5Bn euros) is transacted with negative yield (76.8Bn euros). Just this week, the amount increased to 21.7Bn euros, after the entry of 6-7Y bonds in this category.