Portugal issues €750 million in 15-year bonds at just 0.49%
Portugal is getting credit on the bond markets at a new record low.
Countries issue sovereign bonds which is essentially debt to finance their day-to-day financing requirements. Portugal has successfully issued €750 million of debt with a 15-year maturity and will only have to pay 0.49% – a new historic minimum – when the debt matures on 18 April 2034.
The last time that the state carried out a debt auction for 15-year bonds was in September when it issued €400 million at an interest rate of 0.67%.
In the secondary market, bonds with this maturity are trading with an interest of 0.51% while the OT benchmark (10-year bonds) carry an interest of 0.12%.
The new record has, in part, been driven by investor confidence following the general election victory on Sunday for Portugal’s PS socialist government led by prime minister António Costa.
This has fueled increasing demand from investors which was 2.47% above the supply while competition at the last bond issue stood at 2.30 times the supply.
From these auctions Cristina Casalinho, who heads the government’s treasury and debt agency, the IGCP (Agency for Treasury Management and Public Debt), has maintained a strategy of taking advantage of low interest rates for government financing with longer maturities, while buying up more expensive debt in the market and paying off the troika loans earlier.