More than 32.5 billion euros of purchase intentions were registered this Wednesday for a 10-year syndicated 10-year Treasury Bond issue of 4 billion. The success of the operation – whose maturity is October 2031 – confirms the market’s interest in Portuguese debt, with investors in the expectation that the European Central Bank will continue its policy of purchasing assets.
With this Wednesday’s operation, Portugal establishes 0.2995% as a benchmark interest rate for ten-year maturity.
“Demand was quite strong, purchase intentions exceeded 32.5 billion euros, for an issue of 4,000 million. The coupon was established at the 10-year euro “mid swap” rate, which is 0.0166, plus a spread of 28 basis points, which gives a final rate of 0.2998 ”, says Filipe Silva, director of Banco Carregosa investments.
In recent weeks, there has been a tendency for interest rates on European sovereign debt to rise, to which Portugal has not been immune. However, notes Filipe Silva, a year ago in an identical issue, Portugal issued with a 0.475 coupon.
“The rise in rates, as well as the reversal of lows, which had already been reached, end up reflecting expectations of an improvement in the economy and possibly higher inflation rates”, stresses the Investment Director at Banco Carregosa . “Despite everything, it is expected that there will be a control of interest rates by the central banks”, he adds.
The European Central Bank announced in early March that it will increase asset purchases under the Pandemic Emergency Purchasing Plan (PEPP) to contain an increase in bond yields that could hamper the economic recovery. The intention of the ECB, led by Christine Lagarde, has been reinforced several times over the past few weeks.
This Wednesday’s issue has a symbolic character as it occurs a decade after Portugal came under rescue from the IMF. At the time, April 2011, in theLast 18-month bond debt auction, Portugal placed 1.6 billion euros in 18 months paying 5.793%. National bond auctions did not take place again until April 2014.