Portugal Raises 1 Billion Euros in First Bond Auction Since June

Portugal raised 1 billion euros ($1.27 billion) as it sold securities due in 2020 in its first bond auction in four months.

The bonds due in June 2020 were issued at an average yield of 1.8171 percent and the auction attracted bids for 1.8 times the amount allotted, the country’s debt agency said. The government last sold bonds in an auction on June 11, when it raised 975 million euros selling 10-year securities.

Portugal on Sept. 3 raised 3.5 billion euros selling new 15-year securities, the longest bond maturity the country has sold since exiting its three-year bailout program in May. Portugal, which in 2011 received a 78 billion-euro rescue from the European Union and the International Monetary Fund, followed Ireland in exiting the aid plan without the safety net of a precautionary credit line.

The five-year note yield rose 4 basis points, or 0.04 percentage point, to 1.66 percent at 10:45 a.m. London time. The 10-year bond yield climbed 3 basis points to 3.05 percent. Portugal is rated below investment grade by Fitch Ratings, Moody’s Investors Service and Standard & Poor’s.

The country built up a cash buffer before the end of the aid program and the debt agency forecasts Portugal’s treasury cash position will be 9.4 billion euros at the end of 2014, compared with 15.3 billion euros at the end of 2013.

The IGCP, as the debt agency is known, on Oct. 3 said that the total indicative amount for today’s auction was between 750 million euros and 1 billion euros. The debt agency on Oct. 1 said it plans to hold one or two bond auctions in the fourth quarter.

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