The country is in the market with 30-year syndicated debt issuance, taking advantage of the very low interest rate environment.
Portugal started this year’s financing programme with a debt auction, but is now in the market with an operation carried out using a banking syndicate. It wants to place debt with a 30-year maturity, taking advantage of the very low interest rate environment. And judging by the orders in the system, worth over 30 billion euros, it could achieve this. The emission rate is slightly above 1%.
According to IFR data, quoted by Reuters, the orders collected pointed to a yield of 88 basis points above the 30-year mid-swap rate in the euro area. However, this yield declined to 86 basis points. With the mid swap trading at 0.16%, the cost of this debt to the government is expected to be around 1.02%.
In the market, the reference debt line for the 30-year maturity is quoted at 0.786%.
Portugal has mandated Crédit Agricole CIB, Deutsche Bank, Morgan Stanley, JPMorgan, Nomura and Novo Banco to manage the sale.
The final rate will result from the demand that will be registered in this very long-term financing operation. It is not yet known for how much Portugal intends to obtain from this debt issuance, but there is already data on demand. And it is significant: over 34 billion euros.
There is an appetite in the market for debt. In a context of very low interest rates, even negative, investment grade securities like the Portuguese tend to be well received by investors. And there is also demand from the ECB.