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Saturday 15th of January 2011
January 12, 2011    

Portugal succeeds in raising £1 billion in bond sale

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by Kay Murchie
Portugal succeeds in raising £1 billion in bond sale

Portugal has today raised £1 billion via the sale of bonds, although analysts say this does not mark the end of the country’s problems.

Portugal was successful in borrowing €1.25 billion via a bond auction but fears remain that the debt-ridden country may still require an emergency bailout from the EU - something which Prime Minister Jose Socrates fiercely denies.

Portugal’s 10-year bonds will be paid back at a rate of 6.7% - slightly below the 7% benchmark that had been expected - and the five-year bonds at a rate of 5.4%.

However, according to analysts, the success of today’s auction was attributed to input from the European Central Bank in recent days, as well as pledges of support from Japan and China.

Portugal still has to raise up to €20 billion this year alone to cover debts, which has led many to put pressure on the country and agree to a rescue package, like Ireland and Greece.

There have been fears over recent weeks that the debt crisis in the euro zone could spread to weaker economies, such as Portugal, Spain, Italy and Belgium.

Sources say a Portuguese bailout package could total between €50 billion and €100 billion.

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