Portugal pays out eye-watering €9Bn in treasury bonds

Portugal faced a major and eye-watering annual public debt repayment on Tuesday. More than €9Bn in Treasury bonds came due for repayment to large investors.

The substantial volume of capital to be repaid may well have been one of the factors that led the Treasury and Public Debt Management Agency (IGCP) to concentrate the majority of this year’s planned debt issuances in the first half of the year.

This marks the maturity of the Treasury bond (OT) line opened on July 21, 2016, with a 2.875% coupon.

The maturity date is set when the line is opened—meaning the country cannot alter it—so public coffers must have the liquidity available for repayment.

However, the amount to be repaid is lower, as the Treasury had already conducted two operations in December to reduce the sum owed to creditors.

In total, €955 million of these bonds were repaid early; such operations serve to smooth out maturity profiles and prevent large “debt walls.”

By June, €15.5Bn had been raised through Treasury bonds—representing 65% of the annual issuance target for this instrument, according to the third-quarter update of the Portuguese Republic’s 2026 financing programme.

Analysts consulted by business daily ‘Negócios’ hold differing views on what prompted the IGCP to raise the bulk of its annual funding target during the first half of the year alone.

Filipe Grilo, an economist and professor at Porto Business School, links this €9Bn figure to one of the factors that drove the agency “to issue debt in such a concentrated manner” during those initial six months.

“Portugal issued two-thirds of its authorised debt in the first half of the year, and—given the timing—it was the worst possible moment to issue debt,” he added, noting the coincidence with the outbreak of the conflict in the Middle East.

Conversely, Filipe Silva, Chief Investment Officer at Banco Carregosa, views this as a “completely normal process,” noting that “the debt was already being refinanced, since the market always operates with a lead time of one to one-and-a-half years.”

Regarding the decision to secure funding during the war, he argues that “if there is a risk of the European Central Bank (ECB) raising rates, Portugal should issue debt as quickly as possible—locking in a theoretically lower rate—rather than waiting and risking inflation becoming more entrenched.”

Source: Negócios