adminThis was sharply higher than 1,232 percent paid at the last such auction on May 15.
Demand for the bonds fell but nevertheless amounted to 1.8 times the amount of bonds on offer.
Portugal’s debt management agency also placed five-month bonds to raise 300 million euros at a rate of 1,045 percent. This compared to a rate of 1,041 percent for an issue of six-month paper on June 19.
Demand rose sharply to 4,4 times the amount on offer from 2,5 times at the last auction.
At Banco Carregosa, bond strategist Filipe Silva said that the auctions had raised the targeted amounts and had been carried out normally even though “the political deadlock may have weighed on the 12-month rate”.
Portugal is enacting deep reforms under a debt-rescue programme by the International Monetary Fund and European Union which provided funding of 78 billion euros in May 2011.
The country was rescued because it could no longer borrow sufficiently at high rates demanded on the eurozone bond market, but it never withdrew entirely from the market for short-term funding.
The rescue programme is due to end in June 2014 when Portugal should return normally to the bond market.
But investors are worried about the political situation because the right-wing coalition in power since June 2011 has been thrown into disarray by the resignation of two key ministers at the beginning of July.
Last week, Conservative President Anibal Cavaco Silva called on the three political parties which signed up to the rescue programme to agree on a pact to pursue radical reforms so that the country can avoid a second rescue.
The two parties in the coalition and the main opposition Socialists are holding talks which could lead to early elections in a year’s time. — AFP.
Online Reporter