Portugal puts 1,250 million euros at 6 and 12 months. Interests soar – Bonds

Portugal this Wednesday placed 1,250 million euros in issues of Treasury Bills (BT) at six and 12 months, in what was the first double auction of the second quarter.

The Republic paid higher interest than in the previous comparable operation. IGCP – Agência de Gestão da Tesouraria e da Dívida Pública issued 440 million euros in six-month BT, maturing in March 2023, with a yield of 1.291%, a shot from the average interest rate of -0.179%, in the last operation on the 18th of May.

In the 12-month issue, 810 million euros were placed, with a yield of 1.916%. In the last comparable issue, the institute led by Miguel Martin issued 875 million euros at an average interest rate of 0.236%. In this “longer term” issue, demand exceeded supply by 1.55 times, while in the six-month BT placement, the “bid to cover” was 2.92 times.

The movement of “yields” in the primary market has accompanied the increase in interest rates in the secondary market. For Filipe Silva, investment director at Banco Carregosa, this behavior can be explained by the conduct of monetary policy by central banks.

“Central banks continue with aggressive monetary policies, in an attempt to curb inflation, while at the same time they try to soften the impact on the economy”, begins by explaining Filipe Silva. the financing costs of the new issues that come to the market”, he adds.

Portugal has been no exception, and national debt yields at all maturities have worsened, having renewed five-year maximums, even so the spread against ten-year German bonds – a benchmark for the European market – has been stable, which for the investment director of Banco Carregosa reflects the “good moment the economy has been experiencing”.

Even so, Filipe Silva anticipates that the “era of negative interest rates has come to an end”, so “the cost of debt service will continue to increase”.

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However, “if central banks achieve their goals, the abrupt increases we have seen will soften in the long term”, safeguards the expert.

During this Wednesday’s session, the interest on the six-month debt on the secondary market was fixed at 0.565%, while the “yield” of the 12-month debt worsened to 1.252%.

News updated at 10:59 with comments from Filipe Silva, investment director at Banco Carregosa).