Essential Business

Interest on Portuguese debt at highest level since 2017

 In Bonds and Gilts, News

Interest rates on Portugal’s sovereign debt has increased to its highest level since September 2017.

The increase in interest rates on sovereigns accompanies similar increases bonds across the Euro Zone in the run-up to a meeting on monetary policy at the European Central Bank next week.
Interest rates on Portuguese 10-year debt rose 1.3 base points to 2.335%, the highest yield this year, and a yield not seen since 29 September 2017.
Interest on Portuguese bonds with a 10-year maturity crossed the 2% line on 29 April and have been over 2% ever since. The spread of interest on Portuguese debt compared to the European ‘German’ benchmark is at its maximum level since June 2015.
The rise in interest rates on bonds is a headache for Portugal’s Minister of Finance, Fernando Medina who faced Portugal’s public debt reaching a new record high of €279Bn in April. The Bank of Portugal has also revealed that Portugal’s public debt increased €3Bn in April on March reflecting “bond issues, particularly of long-term bonds, worth €3.5Bn”.
On the other hand, the Bank of Portugal announced a partial amortisation of loans from the European Financial Stability Mechanism of €500 million in public debt.
Getting Portugal’s national debt down is one of the top priorities for the finance minister whose target for this year is to achieve a public debt ratio of 120.7% of GDP by the end of 2022. In the first quarter of this year Portugal’s public debt fell to 127% of GDP according to Bank of Portugal data.
Speaking on the sidelines of an event organised by the International Club of Portugal on Thursday, economist and former Finance minister Dr. Eduardo Catroga told Essential Business he wasn’t overly worried by the figures for the time being, because the overall trajectory of Portugal’s public debt was “downward” and measured against a basketful of economic indicators including Portugal’s GDP growth rate of 2.8% in April and estimated 5.8% for 2022 as a whole, these more than compensated the equation”. “You cannot look at just one set of figures”, he said.


Read More