Government has increased this year's maximum limit of issuance of Savings Certificates and Treasury Certificates to €16.5 billion from the current €7 billion.
Portugal’s government has increased this year’s maximum limit of issuance of debt in the form of Savings Certificates and Treasury Certificates to €16.5 billion from the current €7 billion, noting that “individuals’ interest” in this type of instrument has been “far exceeding the forecasts” made of the demand.
“During the current year, private individuals’ interest in subscribing to Saving Certificates has far exceeded the forecasts underlying the drafting of Council of Ministers Resolution No. 1-A/2023, of 3 January,” reads Order No. 5457/2023, published on Thursday in the state gazette.
“Considering that the impact of such circumstance until the month of March, together with the forecast of maintenance of the paradigm, will result in subscriptions of savings certificates considerably higher than those foreseen at the beginning of this year, it is justified to proceed with a change in the limit previously approved for the issue of this instrument, as established in paragraph 4 of Council of Ministers Resolution No. 1-A/2023, of January 3,” the order reads.
Under the terms of the legislation – signed by the minister of finance, Fernando Medina, and taking immediate effect – “the limit of 7,000,000,000.00 [euros] regarding the issue of Saving Certificates and Treasury Certificates, set out in no. 4 of Council of Ministers Resolution no. 1-A/2023, of 3 January, is increased to 16,500,000,000.00 euros.”
Since the increase in debt issuance through this instrument will allow for a reduction in funding from other sources throughout this year, the order also determines a reduction in the ceilings for the issue of Treasury Bonds (to €19.5 billion from the previous €25 billion) and of Treasury Bills (to €8.5 billion from €12.5 billion).
As a result, the overall net borrowing limit set in the state budget for 2023 remains unchanged.
According to data from the Bank of Portugal, in the first quarter of this year, families invested more than €9 billion in Saving Certificates, compared to only €150 million in the same period last year.
The central bank data also show that in March the outstanding stock of Saving Certificates increased by €3.549 billion, or 14.1%, compared to February, for a total of €28.600 billion.
The rise in Euribor rates, particularly the three-month Euribor index – which is used in the formula for calculating the interest rate on Saving Certificates – has increased demand for this investment product.