Portugal issues extra debt due to coronavirus
The agency that manages public debt announced an increase in the amount issued in both Bonds and Treasury Bills in the second quarter of the year.
The Treasury and Public Debt Management Agency (IGCP) will issue more debt to meet the increased needs generated by the Covid-19 pandemic. In the financing programme released this Tuesday, the agency led by Cristina Casalinho points to an increase of 250 million euros in each auction of medium or long-term securities, in addition to 1.3 billion in the short term.
“In response to the increased funding needed for 2020, caused by the Covid-19 pandemic, the IGCP will adjust the 2020 funding programme,” the agency announced in a statement.
During the year, the IGCP will increase the amount of Treasury Bond (T-Bonds) issuance by 250 million euros per auction, while accelerating the medium and long-term financing programme.
The 2020 funding programme provided for issuing 6.7 billion euros in T-Bonds. 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 were foreseen to meet the state’s financing needs. This figure may now increase, but the final figure is not yet known.
The increases in debt issuance may serve for Portugal to take advantage of the emergency programme announced by the European Central Bank (ECB). The institution led by Christine Lagarde has launched a Pandemic Emergency Purchasing Programme (PEPP), which will buy 750 billion in public and private debt.
This will work – at least – until the end of 2020 and the more flexible rules than those of the previous programmes (which imposed limits on the amount that could be bought) allow the ECB to buy all the bonds that a country issues.
Besides medium and long-term securities, the IGCP will increase the Treasury Bill (T-Bills) issuance from 1.3 billion euros to 3.1 billion euros in 2020.
The schedule, published this Tuesday, foresees three T-Bills auctions to be held in the second quarter: on April 15th (1,000 to 1,250 million euros over three and 11 months), May 20th (1,500 to 1,750 million euros over six and 12 months) and June 17th (1,000 to 1,250 million euros over three and 11 months).
