Lisbon, Portugal, 15 Feb – Interest rates on Portuguese sovereign debt Monday reached record levels on the secondary market, following figures published by the country’s National Statistics Institute (INE) on economic growth in the fourth quarter of 2010.

Year on year, the Portuguese economy grew by 1.4 percent but against the previous quarter it contracted by 0.3 percent.

The 0.3 percent contraction was due to a slowdown in exports and the fact that a rise in automotive sales was not enough to make up for a drop in consumer spending, which already reflects the austerity measures implemented by the government.

Figures from financial news agency Bloomberg showed that interest rates for five-year bonds were at the highest level since Portugal became part of the Euro Zone reaching 6.825 percent, and above the 6.734 percent reached in the morning ahead of publication of the INE GDP figures.

The spread in relation to benchmark German bonds stood as 447.2 basis points and rising.

Credit defaults swaps, financial instruments that insure sovereign debt, were rising more than 14 percent, with interest on 10-year bonds at 7.3 percent, as compared to 7.21 percent before INE published its figures. (macauhub)