Portugal sold 1.5 billion euros ($2 billion) of bills in an auction today, the maximum amount for sale, with investors demanding higher interest rates to purchase the debt.
The 12-month securities due in May 2013 were issued at an average yield of 3.908 percent, the country’s debt management agency said. That compares with an average yield of 3.652 percent at a previous auction of 12-month bills on March 21. The auction attracted bids for 2.7 times the amount offered, compared with a bid-to-cover ratio of 2.5 in March.
The debt agency also sold 500 million euros of six-month bills due in November 2012 at an average yield of 2.935 percent, attracting bids for 4.1 times the amount offered. That compares with an average yield of 2.9 percent at a previous auction of six-month bills on April 4, with a bid-to-cover ratio of 5.
The IGCP, as the debt agency is known, on April 26 said that the total indicative amount for today’s auctions was between 1.25 billion euros and 1.5 billion euros.
The sale “took place without surprises” and “interest is still there,” said Filipe Silva, who manages 60 million euros of securities at Banco Carregosa SA in Oporto, northern Portugal. The next test will be to sell debt maturing after September 2013, he said.
Prime Minister Pedro Passos Coelho said March 5 that if the country can’t tap bond markets by September 2013 as planned, due to “external reasons,” it would be able to count on continued support from the International Monetary Fund and the European Union. Portugal is cutting spending and increasing taxes to comply with the terms of a 78 billion-euro aid plan requested last year from the IMF and the EU.
Portugal’s two-year note yield fell 31 basis points from April 30 to 8.27 percent as of 11:05 a.m. in London.
The European Central Bank in February approved the temporary use of additional collateral in funding operations by seven euro-area members’ central banks including Portugal. It offered loans of up to three years against eligible collateral on Feb. 28 that can be used to finance purchases of assets including higher-yielding government debt.
Portugal’s IGCP on March 29 said it plans to sell as much as 4.5 billion euros of bills in the second quarter. It sold 1.5 billion euros of six- and 18-month bills on April 4.
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