Portugal Sells Maximum Amount of Treasury Bills at Auction

Portugal sold the maximum target of 2.5 billion euros ($3.2 billion) of securities at a sale of three-, six- and 11-month treasury bills.

The nation issued 1.25 billion euros of 11-month bills, the longest maturity it has auctioned since the nation sought a rescue last year. The securities due in December 2012 were issued at an average yield of 4.986 percent and investors bid for 2.1 times the amount issued, the debt management agency said.

The last time Portugal auctioned debt with a maturity of 11 months or longer was on April 6, when it sold 455 million euros of 12-month bills at an average yield of 5.902 percent and a bid-to-cover ratio of 2.6. The country requested a bailout later the same day.

The IGCP, as the debt agency is known, said on Jan. 12 the total indicative amount for today’s auctions was between 2 billion euros and 2.5 billion euros. The agency said it added the 11-month bills to the maturities already scheduled for sale today in its quarterly calendar due to “specific demand from investors.”

Today’s auction was Portugal’s first debt sale since Standard & Poor’s on Jan. 13 followed Fitch Ratings and Moody’s Investors Service in downgrading Portugal’s credit rating to non-investment grade.

Costs Decline

Portugal’s borrowing costs declined at the auction of 754 million euros of six-month bills. The securities due in July were issued at an average yield of 4.74 percent, the debt management agency said. That compares with an average yield of 5.25 percent at a previous auction of six-month debt on Nov. 16. Today’s auction attracted bids for 3 times the amount sold, versus a bid-to-cover ratio of 4.1 in November.

The debt agency also sold 496 million euros of three-month bills at an average yield of 4.346 percent, attracting bids for 4.1 times the amount sold. That compares with an average yield of 4.346 percent at a prior three-month auction on Jan. 4, with a bid-to-cover ratio of 2.4.

Portuguese bonds were little changed with the 10-year yield rising four basis points, or 0.04 percentage point, to 14.28 percent at 11:30 a.m. London time. It reached at record 14.48 percent on Jan. 16.

(Updates with bond price in eighth paragraph. For more on Europe’s debt crisis, click on EXT4.)
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