Debt: Portuguese yields slide on ECB bond-buying news (update)
Besides putting a new bailout out of the picture, ECB’s measures for a new bond-buying programme announced Thursday could make the next governmental short-term debt auctions easier.
Portuguese bond yields fell to their lowest level since before the country sought its eurozone bailout, after the European Central Bank cleared the way for potentially unlimited purchases of government debt.
An hour after the ECB’s chairman, Mário Draghi, announced plans for a new bond-buying programme that officials hope will draw a line under the eurozone debt crisis, the yields on 10-year Portuguese government debt were at a 16-month low of 8.878%. Friday’s session kept the down trend to 8.54%, lower than the 9.3% registered earlier in the week.
Bond yields indicate what a state must pay investors to borrow money for 10 years.
In his statement at the ECB’s headquarters in Frankfurt, Draghi made clear that the bank would only buy Portuguese government debt once the country returns to the markets.
Analysts heard by Portuguese newspapers and quoted in this Friday’s press say that even if the new tool was created with Spain and Italy in mind, Portugal can clearly benefit when it returns to the financial markets.
Bailed-out Portugal is scheduled to return to financial markets in September 2013 and by then there will be €10bn in government debt maturing. The ECB’s new tool could then prove helpful, but the country must stick to its budget goals in order to have access to the new programme. Even if Portugal has no guarantees of being able to benefit from the ECB’s help, its mere possibility could prove helpful for Portugal.
The risk of a second bailout, in terms of its probability, may have been reduced, even if it hasn’t disappeared”, said the head of trading at Banco Best, Carlos Almeida, quoted by the online edition of financial Jornal de Negócios.
Besides putting a new bailout out of the picture, the measures announced Thursday could make the next governmental short-term debt auctions easier.
with Lusa News
Last update 1.15pm
Photo by Boris Roessler/EPA
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Septimus Octavius
OMG! OMT! What is your esteemed PM going to say tonight, I wonder?
Is it already too late for Germany to quit the euro?
See the website.
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Germany can take a hike!
Devesh
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