State debt agency raises over €1bn in bond auctions at ‘lower’ yields

Page created: Wednesday, 23 March 2016 13:51 GMT

Government Bonds  Public Debt

Portugal on Wednesday raised €1.007 billion – more than its target amount – in two separate auctions of bonds with maturities of five and 14 years, according to the state debt management agency (IGCP).

The average yield on the five-year bonds was lower than for the previous comparable auction.

According to a note on the IGCP website the agency placed with investors €504 million in treasury bonds maturing on 15 April 2021 at an average yield of 1.84%. In the last comparable auction of five-year bonds, on 9 March, the IGCP placed €594 million in bonds at an average yield of 2.03%.

Demand in Wednesday’s auction was €889 million or 1.76 times the amount placed.

In the separate auction of 14-year bonds the IGCP placed €503 million in bonds maturing in early 2023. The average yield was 3.362%.

That is higher than the yield in the last auction of 10-year bonds – also on 9 March – when the average was 3.13%. But it is lower than the 5.377% average in an auction of 13-year bonds in 28 July 2010 – the last time a bond with a maturity close to 14 years was issued.

According to Filipe Silva, director of asset management at Banco Carregosa, “the rates came out in line with what’s being done in the secondary market, so there were no surprises”.

He stressed that in the auction of five-year bonds the average yield was down on the previous comparable exercise and that while there is no direct comparison available for the 14-year bonds, the yield was close to that in the secondary market for 10-year bonds, currently 2.82%.

In recent months the IGCP has focussed on auctions of 10-year bonds.

In October last year Portugal issued a 22-year bond. It raised €350 million at a yield of 3.23%.

This year as a whole the IGCP has said it aims to issue a gross €18 billion to €20 billion in medium- and long-term debt, “including syndicates and auctions” and assuring “at least” one bond auction per quarter.