Portugal hails success of new debt sale

Portugal lured strong demand and lower interest rates Wednesday as it sold 1.255 billion euros ($1.732 billion) in short-term debt, hailing it as a sign of renewed market confidence.

The high rates demanded for Portugal’s debt last year spurred fears that the country may be forced to seek an international rescue by the European Union and IMF.

But the state managed to auction 800 million euros of 12-month bills at an average yield of 3.71 percent, significantly down from 4.029 percent at a previous auction on January 19, the public debt agency said.

And demand was solid; 2.6 times greater than supply.

The six-month bills went at 2.984 percent, against 3.686 percent previously, the agency said.

The Finance Ministry hailed the debt issue as a success.

“The Portuguese Republic succesfully conducted a new issue of public debt, placing the maximum amount forecast, at lower rates than were attained previously at comparable maturities,” it said in a statement.

Demand was “very solid” and most of it came from overseas, the ministry added.

“The result shows once again the confidence of the markets in Portugal’s policies of budget consolidation and economic development.”

Last week, the agency said Portugal could cope with paying higher risk premiums on its debt, saying that even in an extreme case its implicit refinancing costs would be less than 5.0 percent up to 2013.