By BARRY HATTON
LISBON, Portugal (AP) â¿¿ Portugal sold 10-year bonds Tuesday for the first time since it needed a bailout in 2011, representing a milestone in efforts to restore investor confidence in the frail eurozone country and prove that contested austerity policies are paying off.
Though Portugal remains a ward of its bailout creditors and a full economic recovery will still take years, its success in raising 3 billion euros ($3.9 billion) on international markets was a welcome positive sign for European leaders eager to put a three-year financial crisis behind them.
Portugal, one of five eurozone countries that have needed rescue, hadn't sold long-term debt since it needed 78 billion euros ($102 billion) two years ago to escape bankruptcy. The three major international ratings agencies downgraded Portugal's credit worthiness to junk status as the debt-heavy country fell victim to the eurozone financial crisis that spooked investors.Growing concerns that Portugal had too much debt and too little growth made markets uneasy about lending it money. That sent the interest rate, or yield, that the country pays on its 10-year bonds above 7 percent â¿¿ a rate that made selling debt unaffordable and which compelled Portugal to ask for help from the International Monetary Fund and its European partners. The Treasury said Portugal sold the bonds at a rate of 5.669 percent Tuesday. Foreign investors bought 86 percent of the bonds, and demand was so strong that Portugal could have sold 10 billion euros' worth, Treasury Secretary Maria Luis Albuquerque said. As the 17-nation eurozone tries to reduce its debt load, Portugal has been at the heart of the debate about the merits of the austerity policies demanded by the bailout creditors in return for their loan. Many Portuguese and international economic experts blame the last two years of pay cuts and tax hikes for the record jobless rate of 17.5 percent. The government forecasts a third straight year of recession in 2013.