Portugal Raises Almost $2 Billion In Debt Auction
LISBON, Portugal (AP) â¿¿ Portugal raised the â¿¬1.5 billion ($1.98 billion) it wanted in a short-term debt auction Wednesday but investors demanded higher interest rates on the loan in a reminder that the country's debt problems remain a long way from being solved.
Portugal needed a â¿¬78 billion bailout rescue a year ago when the country's feeble growth and increasing debt levels led markets to charge it unaffordable interest rates.
The government is locked into a three-year program of austerity measures and economic reforms aimed at spurring growth. But Portugal is in its third recession in four years, and unemployment has climbed to a record 15.3 percent. That has fueled fears the country may need more financial aid.
The national debt agency said it sold â¿¬500 million in 6-month Treasury bills at a rate of 2.935 percent, up from 2.9 percent a month ago. It sold 12-month bills at 3.908 percent, higher than the 3.652 percent demanded in March.Demand, however, was healthy, with the shorter bills four times oversubscribed, the agency said. Portugal aims to raise up to â¿¬4.5 billion in Treasury bills in the second quarter of this year. In the first quarter it collected around â¿¬10 billion. The bailout lenders â¿¿ the European Central Bank, the International Monetary Fund and the European Commission â¿¿ have praised Portugal's progress on implementing the recovery program. The budget deficit last year fell to 4.2 percent of gross domestic product, down from 9.8 percent in 2010, though that was achieved in part by transferring banks' pension funds to the Treasury. Government debt in 2011 stood at 107.8 percent of GDP, and authorities face a formidable challenge in cutting it back. Portugal has continued debt auctions to maintain a market presence. Its financing needs are met by the bailout until September 2013 when it has to make a â¿¬9.74 billion bond redemption.
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