Portugal successfully raised its maximum target at an auction of its short-term debt on Wednesday at lower cost, despite increasing concerns over the country's economic outlook.
The debt agency IGCP sold EUR 1.5 billion of treasury bills in the sale, reaching the top-end of its target range of EUR 1.25 billion and EUR 1.5 billion.
The agency placed EUR 750 million treasury bills maturing on May 18 at an average yield of 4.068 percent, down from 4.346 percent in the previous sale on January 18. The bid-to-cover ratio, however, fell to 2.8 from 4.1.
The country also sold EUR 750 million of debt maturing on July 20. The yield on the paper dropped to 4.463 percent from 4.740 percent in the previous auction on January 18. Demand was 2.6 times the offer, down from 3 in the previous sale.
At the start of the week, Portuguese bond yields climbed to the highest level in Eurozone's history amid concerns that the country may follow Greece in seeking a second bailout to avoid a bankruptcy. The yield on 10-year Portuguese bonds over German Bunds exceeded 15 percent for the first time in the euro era.
All the three international rating agencies have downgraded Portugal debt ratings to "junk". The economy is currently in recession and the gross domestic product shrunk 0.6 percent in the third quarter.
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