* Lisbon raises 3 bln euros in tap of 2024 bond
* Sale is further step towards regaining regular market
* Greek yields fall again after encouraging budget data
By Joshua Franklin
LONDON, Feb 11 Portuguese government debt yields
edged up on Tuesday as investors made room for fresh paper from
a chunky bond sale that took Lisbon closer to exiting its
international bailout later this year.
Lisbon raised 3 billion euros from the syndicated offer of a
2024 bond first issued last year, with 9.5 billion euros of
The relatively large size of the sale prompted investors to
reshuffle their portfolios, leading to some upward pressure on
yields in secondary markets.
Some traders and analysts saw scope for yields to fall back
in coming weeks once the initial supply shock faded, given a
well-bid sale of a five-year bond in January was a catalyst for
hefty Portuguese bond gains this year.
Portugal's 78-billion euro EU/IMF bailout is due to end by
mid-year and investor demand at debt sales - and especially of
longer-dated bonds - will be a gauge of Lisbon's ability to
secure funding without a new international safety net.
"(Portugal) is progressively regaining its full-market
access," said Cyril Regnat, a strategist at Natixis in Paris.
Portuguese 10-year yields were 6 basis points
higher at 5.06 percent. They were some 25 bps above the 3-1/2
lows hit in January but still about one percentage point below
Demand for its bonds so far been driven by improved growth
expectations and a benign environment in the euro zone debt
market, supported by ultra-easy European Central Bank policy.
But analysts said Portugal is not yet on the Irish exit
Dublin exited its bailout at the end of last year without
needing an international safety net. Its benchmark borrowing
costs were roughly 3.5 percent at the time, a distant prospect
"(With this sale) there is more confirmation that there is a
good chance for Portugal to leave the exit programme relatively
smoothly," said Rainer Guntermann, a rate strategist at
Commerzbank in Frankfurt. "But at yield levels close to 5
percent it's still a bit of a shaky situation."
The downward trend in Portuguese yields may also be tempered
by lingering uncertainty in emerging markets after the recent
sell-off. Portugal's junk rating excludes it from major European
bond indexes and leaves it with an investor base that includes
investment funds exposed mainly to emerging markets.
Yields on junk-rated Greek bonds fell for a seventh
consecutive session and outperformed euro zone peers after the
government posted a primary budget surplus in January which was
almost double that reported a year earlier.
Greek 10-year yields were down 23 bps at 7.50
percent while 30-year yields were 15 bps lower at 7.31 percent.
While the market reflects lingering concern from investors
that they may not be repaid in full, with 10-year bonds yielding
more than longer-dated ones, the gap has narrowed to 20 bps from
35 bps last week after upbeat data and signs Athens and its
lenders are nearing a deal on its next aid payment.
German 10-year Bund yields were little changed
at 1.69 percent after new Federal Reserve Chair Janet Yellen
suggested the U.S. central bank was on track to keep reducing
its policy stimulus. ID:nL5N0LG35L]