Portugal raises €1.63bn as borrowing costs jump
Portugal sold €1.63 billion of debt on Wednesday, with yields rising sharply as global bond market turmoil pushes up funding costs for sovereign issuers.
Portugal raised €1.629 billion in a bond auction on Wednesday, but had to pay sharply higher yields as global market turbulence drove up sovereign borrowing costs. The sale shows how international volatility is feeding through to Portugal’s funding conditions.
The IGCP, Portugal’s debt agency, reopened three Treasury bond lines and sold €602 million of bonds maturing in June 2035 at a yield of 3.632%, 30 basis points above the June auction. It also raised €629 million in 2034 bonds at 3.559%, and €400 million in bonds maturing in February 2030 at 3.122%, up from 2.834% in May.
According to the auction details, the total amount sold was within the indicative range of €1.5 billion to €1.75 billion. ECO reported that the 3.632% yield on the 2035 line was the highest since March 2017, when Portugal paid 3.95% on comparable debt.
The rise in funding costs had been expected after weeks of tension in global bond markets. The latest pressure has been linked to higher energy prices and inflation risks tied to the escalation of the war in Iran, while investors also anticipate further monetary tightening after the European Central Bank raised rates in June and is expected to do so again on Thursday.
With this operation, Portugal has now secured almost 80% of the state’s financing needs for the year, as it heads into the final quarter amid elevated uncertainty.
Originally published at Eco.pt
