Portugal to issue 10-year sovereign bonds to cover COVID storm

Portugal’s Agency for the Treasury and Public Debt Management returns to the markets on Wednesday to auction off public debt through five and 10 year bonds.

The IGCP which seeks to raise €1.2Bn does so at a time when interest rates on sovereign debt have fallen in the secondary market and investors are seeking refuge assets like bonds and gold.
Volatility has returned to the financial markets with the spread of the coronavirus which is reflected in a sharp downward trajectory in yields.
At a time when interest on sovereign bonds has fallen worldwide as investors flee risk, Portuguese treasury bonds return to the market on Wednesday with a long-term auction.
“The IGCP will undertake two Treasury Bonds auctions on 11 March at 10.30 with maturity dates for the 15 October 2025 and 18 October 2030,” said the body led by Cristina Casalinho in a communique released on Friday.
The auction should realise between €1Bn and €1.2Bn.
In the secondary market interest rates on Portuguese 10-year debt climbed today to 0.255% while interest on German 10-year debt was trading at -0.729%.
“We are in an uncertain environment and this explains the general feeling of risk so that investors are investing in refuge assets whether German short-term bonds or inflation in the Euro Zone”, said Ranier Guntermann, analyst for Commerzbank in a comment quoted by Reuters.
At the last long-term public debt auction on 12 February, the IGCP issued a total of €1.227Bn at six and 14 years. In the first double auction of this year, the IGCP paid a negative rate (-0.057%) to issue €564 million worth of debt with a maturity date of July 2026, while for the 14-year bonds the Treasury paid a rate of 0.555% to place €663 million on the market with a yield of 0.49% at an auction in October 2019.
For its financing programme this year the Treasury expects to rake in around €16.7Bn by issuing long-term debt, estimating that the amount of liquid capital that the State will need to operate in 2020 should be around €9.5Bn.