Portugal is selling 10-year bonds for the first time in more than two years as it seeks to regain full access to debt markets following its 2011 bailout.
The new securities due in February 2024 may yield 400 basis points more than the mid-swap rate, according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak about it. Investors have submitted bids for more than 9 billion euros ($11.8 billion) of debt, compared with the 3 billion euros being sold, Finance Minister Vitor Gaspar told reporters in Brussels.
The sale is being arranged by Caixa-Banco de Investimento, Citigroup Inc., Credit Agricole SA, Goldman Sachs Group Inc., HSBC Holdings Plc and Societe Generale SA, a person who asked not to be identified because they’re not authorized to speak about the transaction said yesterday.
Portugal is selling the bonds as yields on the country’s existing 10-year securities are at the lowest since 2010 and a decline in interest rates worldwide is leading investors to seek higher-yielding assets. The nation stopped selling bonds until this year after requesting a 78 billion-euro bailout from the European Union and International Monetary Fund in April 2011 following a surge in debt levels and borrowing costs.
“Portugal’s sale is important because it marks another step in the exit from the crisis,” said Luca Cazzulani, a senior rates strategist at UniCredit SpA in Milan. “In the current market environment, there will probably be demand. Investors are rushing into anything that grants you a good yield and when you look at the Portuguese curve the 10-year is around 5.50% and so I think the sale will find demand.”
The nation’s 10-year yield was little changed at 5.51% at 2:49 p.m. in London after dropping to 5.44%, the lowest since August 2010. The two-year yield fell 14 basis points, or 0.14 percentage point, to 2.42%, and the five- year rate declined seven basis points to 4.15%.
Portugal last auctioned 10-year bonds in January 2011 at a yield of 6.716%. Today’s offering is the country’s first sale of a new bond since it raised 3.5 billion euros from selling five-year notes in February 2011.