Cost of short and long-term debt auctions fell in April, but the average cost in 2017 remains high
The average cost of debt from January to April stood at 3.4%, the highest value since the end of 2014. According to Eurostat, Portugal registered a debt-to-GDP ratio of 130.4% in 2016, which represents a 1.4 pp increase in year-on-year terms. However, the ratio fell by 2.7 pp compared with the third quarter, placing Portugal as the fourth country in the European Union which further reduced the indicator during that period.
As reported by the Portuguese Treasury and Debt Management Agency (IGCP), the Portuguese State direct debt decreased from 240 549 million euros at the end of February to 240 023 million euros at the end of March. This decrease of 0.2% was mainly due to the debt reimbursement of BT 17MAR2017 in the amount of 2 326 million euros.
The IGCP on 12 April issued 1 250 million euros in Treasury Bonds, with 625 million euros maturing in 8 years with an average yield of 3.3%, lower than the yield of 3.95% payed in the 9 year maturity bonds issued in March, and 625 million euros maturing in 5 years with an yield of 2.17%, lower than the yield of 2.74% payed in the previous auction.
The State obtained lower yields on the Treasury Bills auction of 3-month and 11-month maturity, benefiting once more from the downward trend in short-term interest rates. The IGCP auctioned 1 250 million euros in Treasury Bills, with 300 million euros maturing in three months with a yield of -0.266%, lower than the previous yield of -0.219%, and 950 million euros maturing at 11 months with a yield of -0.135%, lower than the previous yield of -0.096%. However, the average cost of debt until April remains high, standing at 3.4%, the highest value since the end of 2014.
Eurostat released the data on the debt-to-GDP ratio of the fourth quarter of 2016. The data showed a debt-to-GDP ratio of 130.4%, which represents a 2.7 pp decrease from the previous quarter and a 1.4 pp increase in year-on-year terms. In comparison with the other European Union countries, Portugal registered the third highest debt-to-GDP ratio and the fourth greatest decrease when compared with the third quarter.
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