On Wednesday, the Portuguese State assumed an implicit cost of 2.33% to issue nine-year debtmore than double the interest rate of just over 1% that a comparable issue supported in February, before the war in Ukraine and before expectations of rate hikes by the European Central Bank (ECB) escalated.
Despite the increase in the cost of financing, the Treasury and the Public Debt Management Agency (IGCP) obtained the 750 million euros, which was the maximum amount planned, even attracting a demand that was 2.68 times higher than the amount it ended up being placed.
Interest to go up. The new debt is no longer cheaper than the old
In a note published by the newsrooms, Filipe Silva, chief investment officer of Banco Carregosa, comments that “Portugal’s risk premium continues to rise and reflects the movement we have seen globally in sovereign debt rates.”
The expert recalls that “at the beginning of the year it was expected that we would see a rise in sovereign debt rates, however the high inflation that is felt worldwide, the war in Ukraine and the new confinements in China have created new disturbances in the business cycle.” In this context, “central banks have been chasing losses, either by withdrawing stimulus faster than initially expected, or by raising interest rates.”
Filipe Silva concludes that “the fact that we are coming out of negative interest rates is a process of economic normalization and healthy for the economy”, however “the current problem is that the pace at which everything is happening is being much faster than expected.” initially planned”. And “the countries of the periphery have been more penalized in this movement, Portugal is no exception and its spread against Germany continues to increase.”
Source: Observadora
