Portugal borrows at record low rates, despite BES rescue

Portugal on Wednesday raised one billion euros ($1.32 billion) of government debt at record low rates as investor confidence recovered after the rescue of the country's biggest private bank. One of the issues was made at half the rate of an equivalent sale in July. Lisbon's Public Credit Management Institute (IGCP) raised 800 million euros with an issue of 12-month Treasury bonds at an interest rate of 0.216 per cent, the lowest for this type of security since the introduction of the single currency. That compares to an issue of 12-month bonds last month when the Treasury raised 850 million euros at a yield of 0.453 per cent. Portugal's debt agency said demand on Wednesday was 1.79 times the offer, although this was less than in July. The IGCP also bought 200 million euros worth of three-month bills at a rate of 0.097 per cent, versus a rate of 0.018 per cent in mid-June. Demand was 3.35 times that of the supply. Wednesday's issue was the first offering of government debt since authorities saved Banco Espirito Santo (BES) from bankruptcy on August 3, pumping 4.9 billion euros into a new entity made from the stricken bank's healthy assets. It subsequently cut the bailout to 3.9 billion euros owing to investment suport from the financial sector, according to AFP.