Bond issues cancelled due to bazooka
Portugal’s treasury and debt agency has cancelled bond auctions which are used raise money to meet the state’s financing needs because it won’t need it thanks to the EU bazooka.
Treasury bonds were to be auctioned today, but this month saw the arrival of €2.2Bn of EU funding.
Portugal had planned to issue between €750 million and €1Bn in treasury bonds at 3 and 11 months maturity but the operation will not go ahead because of the arrival of recovery funds.
A State issues government-backed bonds at maturities of two, five, 10 and or even longer periods and in exchange offers investors interest on their investments. Over the past few years Portugal has been able to borrow on the International money markets at virtually no cost because interest rates have been extremely low or even negative. The European Central Bank via the Bank of Portugal has been buying up a lot of these treasury bonds and currently holds around 49% of Portugal debt from these bond issues.
The institution that oversees bond issues, the IGCP which is managed by economist Cristina Casalinho also issues ‘granny’ or savings bonds to the general public which are available for purchase in post offices and banks and are also considered a low-risk but relatively low return way of saving. There has been considerable interest from the general public over the past few years in these bonds too.
The next action on public debt is scheduled for 15 September 2021 from which the IGCP intends to obtain between €1n and €1.2Bn with maturities of 6 and 12 months.