Issuing public debt has never cost the country so little. The average rate has been falling throughout the year and reached a new historic low in the first nine months of the year.
The cost of the new Portuguese public debt has fallen to a new historical low. With rates systematically falling in the auctions of Treasury bonds and bills (T-Bonds and T-Bills), the average cost of debt issued between January and September 2019 was 1.2%, the lowest ever, according to the monthly bulletin of the Treasury and Public Debt Management Agency (IGCP).
At the height of the crisis, in 2011, when the country requested financial rescue, Portugal issued new securities at an average rate of 5.8%, but costs have been gradually falling. With Portugal’s departure from the European Commission’s Excessive Deficit Procedure, rating agencies began to see the country as a quality investment, which allowed the investor base to be broadened and strengthened the confidence of the markets.
After last year’s average cost stood at 1.8%, the drop in interest rates deepened throughout this year and should be reflected in the cost of debt stock in the year to date, which stood at 2.8% last year.
The favourable external conditions of the financial markets, especially the monetary stimuli of the European Central Bank (ECB), have been the main reason given for Portugal to pay lower interest on T-Bonds issues and persistently negative on T-Bills placements this year.