Portugal raised €943 million ($1.27 billion) from investors by selling a 5-year bond, more than the expected maximum of €800 million. The average yield jumped nearly one percentage point to 4.657 percent from 3.701 percent at an auction. But investors are still edgy about the chances of another sovereign-debt blow-up across Europe.
The premium investors demand to hold Portuguese 10-year bonds were little changed after the auction after rising to 314 basis points over benchmark German Bunds earlier on Wednesday from Tuesday’s settlement of 304 bps.
Earlier this morning, the cost of insuring against the risk of sovereign debt defaults in Greece, Ireland, Spain and Portugal shot higher. It now costs $322,000 a year to insure $10 million of Portuguese bonds against default compared with $296,000 on Tuesday, according to CMA DataVision. Greece’s insurance cost is nearing $900,000 again from $849,000. And Ireland has hit $273,000 from $263,000.
The indicative offer set by the Portuguese Institute for Public Credit Management ahead of the auction was between 300 million euros and 800 million euros. The average interest rate it paid today was 4.657% compared with 3.701% at an auction in late May.