Portugal’s Borrowing Costs Drop to Nine-Year Low at Bill Auction

Portugal’s borrowing costs fell to the lowest in at least nine years as the government auctioned 925 million euros ($1.28 billion) of 12-month bills.

The securities due in April 2015 were sold at an average yield of 0.597 percent, the Lisbon-based debt management agency said. That compares with 0.602 percent at a previous auction of 12-month bills on March 19 and is the lowest rate since Bloomberg began compiling data in March 2005. The auction attracted bids for 1.57 times the amount allotted, down from 1.68 times last month.

The debt agency also sold 325 million euros of bills due in January 2015 at 0.487 percent, attracting bids for 4.08 times the amount allotted. That compares with 1.714 percent at a previous auction of nine-month bills on Oct. 16, which drew a bid-to-cover ratio of 1.46.

Portugal is trying to regain full access to debt markets with the end of its 78 billion-euro rescue program from the European Union and International Monetary Fund approaching on May 17. It has raised 6.25 billion euros selling bonds through banks this year as signs of economic recovery spurred a rally in higher-yielding European fixed-income assets.

The IGCP, as the debt agency is known, said on April 10 that the total indicative amount for today’s auctions was between 1 billion euros and 1.25 billion euros.

The debt agency said on April 3 it expects to hold one or two bond auctions in the second quarter of this year. Portugal has already started to obtain funding for 2015, the IGCP said on Feb. 11 after completing a sale of 3 billion euros of 10-year bonds.

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