Arab Today, arab today portugal pays high rates to borrow 1 bn euros
Last Updated : GMT 12:23:43
Arab Today, arab today
Arab Today, arab today

Portugal pays high rates to borrow 1 bn euros

Arab Today, arab today

Arab Today, arab today Portugal pays high rates to borrow 1 bn euros

Lisbon - AFP

Portugal, negotiating a debt rescue with the EU and IMF, raised one billion euros ($695 million) on Wednesday but had to pay sharply increased interest rates as markets demanded record returns. Even as Lisbon raised short-term funds, sceptical investors were adding to the pressure on the government by pushing 10-year bond yields to record highs, reflecting their doubts that Portugal\'s public finances can be stabilised. In midday trading, the yield -- the rate of return for the buyer or holder of existing debt -- on the benchmark 10-year government bond jumped to 9.025 percent, the first time it has topped 9.0 percent since the eurozone was set up. The yield on the 10-year bond was at 8.950 percent on Tuesday. Rates above 6.0 percent for 10-year bonds are seen as very high and sustainable for only a short period of time. By comparison, rates on German 10-year bonds are about 3.28 percent, reflecting investor confidence in the eurozone\'s strongest economy. Earlier on Wednesday, the government sold 320 million euros in 6-month bills at a yield of 5.529 percent, up sharply from the 5.117 percent paid at a similar sale on April 6. It also sold 680 million euros in 3-month bills at 4.046 percent, up from the 3.403 percent paid on December 15, the public debt office said. The debt office aimed to raise between 750 million and one billion euros, with the 6-month offer attracting bids worth 3.7 times the amount for sale. For the 3-month bills, demand was double the amount on offer. Although the government managed to raise the funds it wanted on Wednesday, the rates it had to pay were very high for such short-term debt, reflecting continued concerns over the state of Portugal\'s strained public finances. Laurent Geronimi at Swiss Life Gestion Privee said that the rates paid on the 3 and 6-month bills were up sharply compared with previous sales.The markets had many doubts about the EU-IMF talks, he said, noting possible political problems in winning approval for a Lisbon package after recent polls in both Germany and Finland. After Greece and Ireland last year, Portugal had to call in the EU and International Monetary Fund at the beginning of the month to negotiate a debt rescue when faced with paying exorbitant rates on longer-term funds. The debt rescue talks with the EU and IMF, who have said they will demand tough conditions for any funding, are supposed to close by mid-May, ahead of Portugal\'s general election on June 5. Lisbon has to have the package in place by June 15 when it has to repay nearly 5.0 billion euros in maturing debt.

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Arab Today, arab today portugal pays high rates to borrow 1 bn euros Arab Today, arab today portugal pays high rates to borrow 1 bn euros

 



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