Portugal should achieve 0.5% interest on the first debt issue of the year

  • ECO News
  • 8 January 2020

The agency that manages the Portuguese public debt is expected to get an interest rate of around 0.5% on the 10-year syndicated debt issue it is promoting this Wednesday.

Portugal is preparing to pay an interest of around 0.5% on the syndicated issue that the Treasury and Public Debt Management Agency (IGCP) is promoting this Wednesday, advances the Jornal de Negócios, which cites provisional data released by Bloomberg. According to the newspaper, the spread was set at 38 basis points above the ten-year euro swap rate, which is at 0.107%.

Investor demand already exceeds six billion euros in this operation, which involves a new line of Treasury Bonds (T-Bonds) maturing on October 18, 2030. The IGCP issue is the first of 2020 and the banks Citi, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan and Novo Banco have been mandated.

As it is a syndicated issue, the entity led by Cristina Casalinho has not given an indication of the amount it intends to issue. As Jornal de Negócios explains, the operation will take place throughout the trading day, and only after the closing of the day should the final interest rate be fixed.

The interest at around 0.5% for these ten-year T-Bonds represents a premium compared to the interest on ten-year bonds in the secondary market, but the newspaper also states that this is the usual rate for this operation. Thus, not being comparable, the interest rate on ten-year Portuguese public debt is 0.357%.

In November 2019, the country financed itself at an interest rate of 0.333% on a regular OT issue, for an amount of up to 970 million euros. But the last syndicated issue was on January 9, 2019, when Portugal obtained four billion euros in ten-year debt at an interest rate of less than 2%.