Portugal went to the markets to raise 1,250 million euros

  • ECO News
  • 16 October 2019

The country went to the markets this Wednesday to obtain 1,250 million euros and, contrary to what has happened in recent auctions, this time the costs did not fall.

Portugal went to the markets on Wednesday to raise 1,250 million euros in short-term debt and, contrary to what has been happening in recent auctions, this time the costs of “borrowing” from investors have not fallen. Even so, the country continues to finance itself with negative interest rates.

Two auctions were held this morning and, in both cases, the Portuguese Treasury recorded less negative interest rates than in previous comparable operations, something that would already be expected in light of the latest decisions of the European Central Bank (ECB) regarding the rate of deposits.

IGCP obtained 350 million euros in three-month Treasury bills at a rate of -0.475%. It compares with the rate of -0.563% observed in a similar auction held in August. In the auction of the bills with a maturity of 11 months, 900 million euros were raised at an interest rate of -0.45%. It is also a less negative rate than that recorded in the August operation (-0.55%). Investor demand weakened slightly, but remained robust to the claims of the agency.

This was the last short-term debt auction of the year for Portugal and the result seems to show, for the time being, a reversal in the trend of interest rates, which had become increasingly negative until now. However, with the decision to create two brackets in the deposit rate, the ECB ended up giving the banks a breathing space (they are less penalised by the current tiering scheme) and gave a new direction to interest rates in the markets.