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Portugal issues new long term bond

Thursday, January 24 08:29:46

Portugal sold 2.5 billion euros of bonds on Wednesday, marking the country's first long-term debt issue since it was bailed out in 2011 and putting it on track for a full market return that may open its way to more aid.

The Oct. 2017 bond was sold for a yield of 4.891 percent and 93 percent of it was snapped up by foreign investors, Treasury Secretary Maria Luis Albuquerque said. Demand reached 12 billion euros.

"Today was a fundamental landmark in the process of returning to long-term debt markets, an objective which demands continuous work and determination," she told journalists.

Under Portugal's 78-billion-euro bailout from the European Union and IMF the country was envisaged to return to finance itself in bond markets in the second half of this year.

"This was a clear recognition of the transformation Portugal has carried out, not only on public finances, but also on the general economy," said Jose Brandao de Brito, chief economist at Millennium bcp.

The issue was a reopening of its 4.35 percent October 2017 bond, first launched in 2007 as a 10-year benchmark.

Portugal last paid 6.4 percent to sell five-year bonds in a placement before its bailout two years ago. Its outstanding 2017 debt was yielding 4.93 percent in the secondary market on Wednesday, the lowest level since late 2010.

The sale should move Portugal closer to getting more support from the European Central Bank, if needed.

The ECB's programme of bond purchases, known as Outright Monetary Transactions (OMT), is only available to countries that have normal access for long-term bonds and have asked European authorities for help. ( C) Reuters