 A Portuguese broker talks on the phone while working in this Jan. 10, 2011 photo in Lisbon. Portugal sold 599 million euros of bonds due in 2020 at a yield of 6.716 percent on Jan. 12, 2011. AP photo |
Portugal’s borrowing costs fell at a sale of 10-year bonds, indicating investor concern the country would follow Greece and Ireland in seeking a bailout was easing.
Portugal sold 599 million euros ($778 million) of bonds due in 2020 at a yield of 6.716 percent, the country’s debt management agency said Wednesday. That compares with 6.806 percent at the previous auction on Nov. 10. The government also placed 650 million euros of bonds due in 2014 at a yield of 5.396 percent, up from the 4.041 percent on Oct. 27.
Portugal is raising taxes and cutting wages to convince investors it can narrow its budget gap after the Greek debt crisis led to a surge in borrowing costs for the most indebted euro nations. Prime Minister Jose Socrates said Tuesday the effort had reduced the deficit to less than the 7.3 percent of gross domestic product, or GDP, forecast for last year. That failed to calm market concerns, with the yield on its 10-year bond closing above 7 percent for the past few days.
“I think 7 percent is a very dangerous number and a worrying number,” David Blanchflower, an economics professor at Dartmouth College and a former Bank of England policy maker, said Tuesday in an interview.
The difference in yield between Portuguese 10-year bonds and German bunds, Europe’s benchmark, fell 10 basis points Wednesday to 387. That spread reached a euro-era record of 4.83 percentage points on Nov. 11.
The debt agency sold at the upper end of the range of 750 million euros to 1.25 billion euros set for the sale. Investors asked for 3.2 times the amount of 10-year bonds sold, up from 2.1 times at the November sale. They sought 2.6 times the 2014 bonds on offer, less than the 2.8 times in October.
The auction was the first bond sale this year by a so-called peripheral nation.
Portugal sold 599 million euros ($778 million) of bonds due in 2020 at a yield of 6.716 percent, the country’s debt management agency said Wednesday. That compares with 6.806 percent at the previous auction on Nov. 10. The government also placed 650 million euros of bonds due in 2014 at a yield of 5.396 percent, up from the 4.041 percent on Oct. 27.
Portugal is raising taxes and cutting wages to convince investors it can narrow its budget gap after the Greek debt crisis led to a surge in borrowing costs for the most indebted euro nations. Prime Minister Jose Socrates said Tuesday the effort had reduced the deficit to less than the 7.3 percent of gross domestic product, or GDP, forecast for last year. That failed to calm market concerns, with the yield on its 10-year bond closing above 7 percent for the past few days.
“I think 7 percent is a very dangerous number and a worrying number,” David Blanchflower, an economics professor at Dartmouth College and a former Bank of England policy maker, said Tuesday in an interview.
The difference in yield between Portuguese 10-year bonds and German bunds, Europe’s benchmark, fell 10 basis points Wednesday to 387. That spread reached a euro-era record of 4.83 percentage points on Nov. 11.
The debt agency sold at the upper end of the range of 750 million euros to 1.25 billion euros set for the sale. Investors asked for 3.2 times the amount of 10-year bonds sold, up from 2.1 times at the November sale. They sought 2.6 times the 2014 bonds on offer, less than the 2.8 times in October.
The auction was the first bond sale this year by a so-called peripheral nation.
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