Portugal enjoyed strong demand from investors in its first sale of longer term government bonds since Lisbon was forced to asked for an EU bailout two years ago.
It received around 10 billion euros in bids for bonds that are due to mature in October 2017.
That is four times more than the 2.5 billion euros it decided to sell.
The level of demand pushed down the interest the government had to pay on those – and 10 year – bonds.
The markets have warmed to Lisbon’s progress on fiscal reforms as it tries to extricate itself from its bailout package and they have been reassured by European Central Bank pledges to purchase the bonds of struggling eurozone countries.
Some in the market said the choice by Portugal to tap the 2017 bond appeared to be aimed at getting Lisbon closer to qualifying for the European Central Bank’s programme of bond purchases, known as Outright Monetary Transactions, or OMT. The programme is only available to countries that have normal access for long-term bonds.
“Portugal is some way away from getting full market access so the OMT is not on the horizon just yet but it’s a step in the right direction,” RIA Capital Markets strategist Nick Stamenkovic said.
“But the fact that Portugal is looking to raise money at this juncture clearly shows the authorities have noticed sufficient investor support out there and are taking advantage of conditions.”