Portugal pays more to issue five and ten-year debt

  • ECO News
  • 11 March 2020

The agency that manages the Portuguese public debt went to the market at a time of high volatility. It placed 1,181 million euros in Treasury bonds.

Portugal issued 1,181 million euros in five and ten-year Treasury bonds (T-Bonds). At a time of high volatility in the financial markets, the Treasury and Public Debt Management Agency – IGCP issued medium-term debt with higher interest rates and did not reach the maximum indicative total.

In the case of ten-year debt, the agency led by Cristina Casalinho issued 500 million at an interest rate of 0.426%. The figure compares with the 0.333% rate paid on November 13 of last year in the last securities auction with this maturity. After that, Portugal made a syndicated sale of ten-year T-Bonds, with an interest rate of 2%.

The IGCP placed 681 million in five-year debt and paid an interest rate of 0.059%. In this period, Portugal had even financed itself with negative interest rates, and in the last comparable auction, in March of last year, the rate had stood at -0.057%.

The rise in interest may be related to the moment of tension in the financial markets. With the coronavirus outbreak threatening the global economy and the major oil producers in conflict, stock markets have been sinking for several sessions, volatility has skyrocketed and investors have resorted to shelters such as German and US debt.

In this scenario of tension, the appetite for Portuguese debt securities has cooled. In the longer term, demand outstripped supply by 1.53 times (compared to 1.63 times in the last comparable auction) and, in the shorter maturity, it was 1.63 times higher (compared to 2.43 times in the last placement).