Sept. 6 (Bloomberg) -- Portugal’s bonds rose, with 10-year yields falling to the lowest in 17 months, after European Central Bank President Mario Draghi said policy makers agreed to an unlimited bond-purchase program.
Benchmark yields dropped 44 basis points, or 0.44 percentage point, to 8.67 percent at 4:10 p.m. in London, the least since April 13, 2011. Portugal requested financial aid from the European Union on April 6, 2011.
Portugal aims to regain access to bond markets by September 2013 and Prime Minister Pedro Passos Coelho has said if the country can’t do that for “external reasons,” it would be able to count on continued support from the European Union and the International Monetary Fund. The country is cutting spending and raising taxes to comply with the terms of a 78 billion-euro ($98.5 billion) aid plan.
Bond purchases may be considered for euro-area countries currently under bailout programs, such as Greece, Portugal and Ireland, when they regain bond-market access, Draghi said today at a press conference in Frankfurt.
Portugal is “sounding out” the market as it prepares to resume sales of medium-term notes, Joao Moreira Rato, chairman of the country’s debt agency, said in an interview in July.
The extra yield investors demand to hold Portuguese 10-year bonds instead of their German equivalents shrank to 711 basis points, the narrowest since June 2011.
Portugal’s five-year note yields declined 72 basis points to 6.38 percent, the least since February 2011. Two-year rates fell to as low as 4.58 percent, the least since March 2011.
Portuguese stocks rose, with the PSI-20 Index climbing 2.5 percent, led by Banco BPI SA and Banco Espirito Santo SA.
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