Portugal progresses funding for next year

By Dow Jones newswires

Portugal on Wednesday progressed further in its funding for next year, attracting solid demand for a 2020-dated government bond at an auction ahead of a broadly expected ratings upgrade on Friday. Vaulted by a $US4. 5 billion dollar bond issuance in July and a €3. 5 billion sale in September, Portugal had already raised more than €15 billion before the auction, above its €11 billion-€13 billion gross bond issuance target for the current year.

An upgrade by Standard & Poor's on November 7 to investment grade may be premature, though, given its stable outlook on its two-notch-below-investment grade rating, said Rabobank analysts. "That said, with Portugal set to make up circa 1. 7 per cent of these [investment grade] indices once it does return, the impact will be sizeable in terms of an automatic boost in demand for Portuguese government bonds on the part of benchmarked indices," they said.

Wednesday's tap of the bond — Portugal's first sale of a bond below the 10-year maturity segment since January — was conducted ahead of markets' broad anticipation of the country's return to investment grade credit rating by Fitch Ratings on Friday.

Read more here: Business Spectator


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