Portugal Returns To Bond Sales With Strong Demand
By BARRY HATTON
LISBON, Portugal (AP) â¿¿ Portugal sold its debt on financial markets Wednesday for the first time since it needed a bailout, collecting â¿¬2.5 billion ($3.3 billion) in an auction of five-year bonds that was a milestone for economic recovery efforts in Portugal and the wider eurozone.
Treasury secretary Maria Luis Albuquerque said Portugal will pay interest of 4.9 percent on the loan â¿¿ an affordable rate and a sign of returning market confidence in Portugal. She said investors placed orders for more than â¿¬12 billion and 93 percent of the sold amount went to foreign buyers.
"This was clearly a significant step in the (bailout) program," Albuquerque told a news conference.The sale was the latest sign that the 17-nation euro area is over the worst of its three-year financial crisis as borrowing costs have recently fallen in countries such as Spain and Italy, which were previously seen as risky investments due to their high debt burden. Portugal was the third country, after Greece and Ireland, to fall victim to the eurozone's financial crisis when it required a â¿¬78 billion lifeline in May 2011 to avert bankruptcy. Investors were alarmed by Portugal's meager growth and high debt and worried they might not get their money back if they loaned it money. That forced Portugal to ask the European Central Bank, International Monetary Fund and its European partners for help. The country's fiscal health has improved since it began enacting cutbacks and economic reforms demanded in return for the bailout. However, the austerity measures are widely blamed for a forecast third straight year of recession in 2013 and a jobless rate of 16.3 percent. Albuquerque said the Treasury didn't sell more bonds Wednesday because it doesn't need the money. The sale aimed to take the measure of market confidence in Portugal after it received broad praise for its obedient compliance with the terms of its bailout agreement. The three-year bailout program initially saw Portugal returning to markets only in September this year.
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