Portugal raised 1.3 billion euros on Wednesday in the issue of six-year and 10-year bonds, offering a higher interest rate than recent issues, the country's debt management agency said. The issue allowed Portugal to raise more funds than the 750 million-1.25 billion euros (947 million-1.6 billion dollars) it targeted despite tensions on European bond markets after Ireland's debt rating was cut one notch.
"It's always important to issue debt successfully, but you cannot talk about a total success insofar as the financing costs for Portugal are up," said Banco Carregosa analyst Bruno Costa in Lisbon. Along with Ireland, Greece and Spain, Portugal has seen the cost it must pay to borrow from bond investors surge in recent months as a debt crisis gripped European countries with the weakest public finances.
Investor demand for the new bonds was strong although they had to be issued at higher interest rates than other recent issues, according to Portugal's debt management agency. The agency issued 672 million euros of 10-year bonds offering an interest rate of 5.312 percent, compared to a yield of 5.225 percent when a 10-year bond was issued on June 6.
It also issued 629 million euros in six-year bonds yielding 4.371 percent, up from 3.834 percent when a six-year bond was sold in February. Investor demand for the 10-year bond was 1.8 times greater than what was offered while the six-year bond was 2.1 times oversubscribed.