Portugal: Debt auction target exceeded; €1.7bn in bills snapped up at low rates

Lisbon, Mar. 16 (Lusa) – Portugal on Wednesday placed a total of €1.728 billion in six-month and 12-month treasury bills with investors – well above the target range for the operation – albeit at average yields that were higher than those registered in the last comparable auctions.

According to information posted by the state debt management agency, the IGCP, €1.285 billion in 12-month bills were placed at an average yield of 0.05% compared with a negative yield in an auction in January of minus 0.001%. Demand in Wednesday’s auction was 1.38 times supply.

The remaining €443 million came from the placing of six-month bills at an average yield of 0.009% compared with a minus 0.013% in January. Demand was 2.14 times supply.

Before the auction the IGCP had set a target range of €1.2 billion to €1.5 billion in bills to mature on 23 September 2016 and 17 March 2017.

The auctions – the last of bills in the current quarter – took place on the day of the final reading in Portugal’s parliament of the 2016 state budget.

According to the director of asset management at Banco Carregosa, Filipe Silva, “Portugal continues to be able to issue [debt] at rates almost at zero and with very reasonable levels of demand”. Whenever the country manages to roll over its debt at very low rates in this way it is positive, he argued.

“For a country that has structural problems in its economy it should be taken advantage of,” he said, adding that this was justifed the agency placing more than the original target amount.

MC/RCR/ARO // ARO