Portugal raised the targeted amount at an auction of its Treasury Bills on Wednesday despite its economic woes.
The debt agency IGCP raised a total EUR 3 billion from three auctions of 3, 6 and 12 month bills. The target for the sale was between EUR 2.5 billion and EUR 3 billion.
The country sold EUR 300 million of bills maturing in May at yield 3.845 percent, down from 4.068 in a sale on February 1. Demand was 10.3 times the offer, significantly higher than the 2.8 in the previous auction.
The IGCP placed EUR 1.2 billion of a new 6-month T-bills maturing in August, paying 4.332 percent. The country paid 4.463 percent for debt of similar maturity on February 1. The bid-to-cover ratio was 2.5, down from 2.6 in the previous sale.
Further, the agency sold EUR 1.5 billion of new February 2013 paper. The yield was 4.943, down from 4.986 paid for one-year paper on January 18. Investors bid double the offered amount compared with a cover ratio of 2.1 in the previous auction.
Portugal is facing increasing economic troubles. Official figures released yesterday showed that the economy contracted at a faster rate in the fourth quarter. GDP decreased a seasonally adjusted 1.3 percent sequentially in the fourth quarter, faster than the 0.6 percent decrease seen in the previous three months. The economy contracted for the fifth consecutive quarter.
At the start of the week, Moody's Investors Service downgraded the ratings on six Eurozone countries, mainly citing the uncertainty over the euro area's prospects for institutional reform of its fiscal and economic framework. The ratings on Portugal was lowered to Ba3 from Ba2. The rating agency also lowered the outlook on the triple-A ratings of UK, France and Austria to 'negative'.
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