Portugal returns to debt markets and requests extension on loan repayments

23 January 2013

Portugal is due Wednesday to return to the medium and long term debt markets with a syndicated placement of 2 billion euros of five-year bonds at a rate expected to be around 5 percent, the Portuguese press reported.

The press also reported that the banking syndicate hired by the government for the operation included Barclays Bank, Banco Espírito Santo, Deutsche Bank and Morgan Stanley.

Portugal’s return to the debt market follows a combination of positive factors both domestically and externally, as the interest rates on Portuguese debt have fallen sharply since mid 2012 due to measures put in place by the European Central Bank (ECB).

Domestically, budget execution figures are due to be announced Wednesday and are expected to show that Portugal has managed to meet its deficit target for 2012, a fact that was highlighted by Finance Minister Vítor Gaspar at a Euro group meeting about returning to the markets.

At the meeting of Euro Zone finance ministers, Gaspar requested an extension on repayment of current loans as a way a relieving the country’s repayment burden in the 2014-2016 period.

Portugal is facing “a considerable concentration of payments in 2014, 2015 and 2016,” thus it “is important” that the Portuguese authorities be able to count on the support of its European partners, “as a way of diluting and deferring those commitments over time,” said Gaspar in Brussels, Belgium. (macauhub)