Portuguese bond interest lower than Spain’s

The interest paid on Portuguese 10-year bonds has fallen to a level lower than the cost Spain has to pay to service its own borrowing needs.

According to the Minister of Finance, Mário Centeno, interest on Portuguese 10-year bonds fell below that of Spanish sovereign bonds of the same maturity.
Speaking on RTP on Friday the minister said: “Today, at around 3pm, the interest rates on Portuguese 10-year bonds in the international markets fell below that on Spanish bonds for the first time”, said the minister.
“The fact that Portugal has lower financing costs than Spain is an extraordinary indicator and one that we now have to try and maintain, and is an indication of the credibility and sustainability of (Portugal’s) economic and financial progress”.
On Friday the lowest ‘yield’ on Portuguese 10-year bonds stood at 0.1045% whereas Spain’s bond yield was slightly higher at 0.1182% for the session.
This is a factor which, according to Centeno, proves confidence in the Portuguese economy which is enjoying almost double the investment it had during the troika years which the Eurogroup president says is “extraordinary progress”.
“Investment behaviour throughout this year will be a deciding factor for meeting the growth target of 1.9% set out by the Government since this is one of the motivating factors that explains why the Government’s forecasts are more optimistic than other entities such as the Public Finances Council or the European Commission which predict a GDP of 1.6% and 1.7% respectively.
However, despite widespread praise for Portugal’s economy in international publications as a “ray of hope” in Europe, the Portuguese economy does not have a “miraculous defence shield” against the trade war currently underway between the United States and China according to the weekend newspaper Sol.
“Despite growth above the European average, Portugal’s degree of exposure in terms of trade and services (which this year should reach 90% of GDP according to Bank of Portugal predictions, the country is more vulnerable to external shocks” states the newspaper in what it terms the “greatest trade conflict in the past 90 years with both Italy and Germany standing on the ledge of a recession and the UK heading for a chaotic Brexit at the end of October.