Reuters logo
Portuguese debt yields rise as Lisbon sells 10-year bonds
February 11, 2014 / 12:30 PM / 4 years ago

Portuguese debt yields rise as Lisbon sells 10-year bonds

* Lisbon aims to raise 3 bln euros from sale-IFR

* Sale further step in regaining regular market access

* Bund futures steady before new Fed chair testimony

By Emelia Sithole-Matarise and Joshua Franklin

LONDON, Feb 11 (Reuters) - Portuguese debt yields edged up on Tuesday as Lisbon sold a 10-year bond in a further step towards regaining regular market access before its planned exit from an international bailout later this year.

Lisbon aims to raise 3 billion euros from the syndicated offer of a 5.65 percent 2024 bond first issued last year, a source close to the deal told IFR, a Thomson Reuters service. The deal will be priced later in the day.

Portugal plans to quit a 78-billion euro EU/IMF bailout by mid-year and investor demand at debt sales - and especially of longer-dated bonds - will be seen as a gauge of Lisbon’s ability to secure funding without an international safety net.

Demand for its bonds so far has benefited from improved growth expectations and a benign environment in the euro zone debt market, allowing it to raise 3.25 billion euros at a Jan. 9 sale of five-year bonds, for which demand was 11 billion.

“Overall, it was a successful auction. It shows there’s still demand for Portuguese debt,” said Lyn Graham-Taylor, fixed income strategist at Rabobank.

“Perhaps it’s not the blockbuster we saw earlier in the year but not surprising given we’re in a little bit more uncertain environment than we were in early January.”

Portuguese 10-year yields were 0.4 basis points higher at 5.01 percent. Earlier yields reached 5.05 percent as traders made room in their books for the new bonds. Some in the market saw scope for the yields to fall back in coming weeks to 3-1/2 lows of 4.81 percent hit in January, especially if the sale beats expectations.

“Sovereigns in the euro area have had a Goldilocks start to the year. We see tighter spreads as still favourably driven by improving economic news over the course of 2014. That will be led by the U.S., while central banks remain accommodative,” Societe Generale strategist Ciaran O‘Hagan said in a note.

The downward trend in Portuguese yields may, however, be tempered by lingering uncertainty in emerging markets after the recent sell-off.

Portugal’s sub-investment 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 16 bps at 7.56 percent while 30-year yields were 11 bps lower at 7.35 percent.

While the market reflects lingering investor concern 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.

At the euro zone’s core, German Bund futures shed 11 ticks to 143.54 as investors braced for new U.S. Federal Reserve head Janet Yellen’s first testimony to shed light on the future pace of reduction in bond-buying stimulus.

Traders said that while Yellen was likely to strike an upbeat tone on the economy, she would emphasise that interest rates were set to remain near zero for some time, anchoring money market rates.

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below