LONDON, Oct 8 (Reuters) - A rally in Portuguese bonds gathered momentum on Tuesday, with 10-year yields falling to five-week lows following last week’s ratings upgrade and a weekend election.
Portugal’s 10-year bond yield fell more than 2.5 basis points to as low as 0.112%, dropping below its Spanish equivalent which traded at 0.13%.
Portugal’s ruling Socialists won parliamentary elections on Sunday. The Socialists fell short of an outright majority, though, meaning Prime Minister Antonio Costa will need to negotiate a new deal with one or both of his far-left allies.
That followed a credit rating upgrade from DBRS on Friday, which lifted Portugal’s rating to BBB. (Reporting by Dhara Ranasinghe; editing by Yoruk Bahceli)