Portugal collects a quarter of the debt it needs for this year

  • ECO News
  • 9 January 2020

Portugal and Ireland went to the market on the same day, managing to capture strong interest from investors.

Portugal inaugurated the public debt market in 2020 with a mega operation. As has been the case in recent years, the first placement of the year was through a banking syndicate, through which the country issued 4 billion euros in ten-year Treasury bonds (T-Bonds). The amount represents almost a quarter of the total forecast for the whole year 2020.

“This is the first syndicated sale of the Republic of Portugal in 2020 and, with this issue, more than 20% [specifically 24%] of the gross emissions target of 16.7 billion euros to be executed through auctions and unions in 2020 is covered,” said the Treasury and Public Debt Management Agency (IGCP), in a statement.

The funding programme for 2020 foresees the issuance of 16.7 billion euros in T-Bonds, combining trade unions and auctions, ensuring monthly emissions. Part of this amount will be used to repay the 8,019 million euros in T-Bonds that will reach maturity, while the other 8,698 million will be used to meet the State’s financing needs (which should stand at around 9.5 billion euros).

The issue held this Wednesday has already covered a large part of this amount, and the syndicated sales have no indicative amount and aim exactly to put a higher amount guaranteed by the syndicate of banks. And investors were willing to buy (much) more: up to 25 billion euros, or 6.25 times more.

“The transaction benefited from strong investor demand, as revealed in the final order book, which was above 25 billion euros (including two billion from the syndicate of banks), which allowed Portugal to place the price of the new bonds with a spread of 33 basis points against the mid swap rate, whose initial guidance was in the area of 38 basis points,” added the agency led by Cristina Casalinho.