Portugal issues first 10-year bond at negative interest rate

  • ECO News e Lusa
  • 13 January 2021

This is a historic milestone for the country that had never financed itself in this maturity with negative interest.

Portugal managed for the first time to issue ten-year debt with negative interest. The Treasury and Public Debt Management Agency (IGCP) carried out this Wednesday the first placement of this year’s Treasury bonds – having dispensed selling via a syndicate of banks and proceeded with an auction – and issued a total of 1,250 million euros.

With bonds maturing on October 18, 2030, the agency led by Cristina Casalinho issued 500 million euros, with an interest rate of -0.012%. This is a historic milestone for the country that had never financed itself in this benchmark maturity with negative interest rates.

The last similar placement took place in September 2020 and, at the time, investors asked for a 0.329% interest to lend money to Portugal for ten years. In the secondary market, this milestone had already been reached in early December, with the national yield jumping between positive and negative territory. On Wednesday, this interest rate trades at 0.021%.

With a maturity of 12 October 2035 (about 15 years), Portugal also auctioned 750 million euros at an interest rate of 0.319%. The last time the country had financed itself with 15-year bonds was before the pandemic, in February last year, where it obtained a 0.555% interest.

In both maturities, investors continued to show a strong appetite for Portuguese debt. In the ten-year Treasury Bonds (OT), demand was 3.02 times higher than supply (2.19 times in the last comparable operation). In the 15-year Treasury Bonds (OT), demand was 2.55 times higher than supply (1.49 times in February last year).