Portugal places bonds after announcing debt action

(LISBON) - Portugal, fighting off a debt crisis, said Wednesday it had raised 1.25 billion euros (1.725 billion dollars) in a bond issue at an interest rate lower than that on a similar operation a month ago.

The Portuguese government made the issue the day after presenting parliament with an anti-crisis programme to reduce overspending, largely with a wave of privatisations.

The rate, or yield, quoted on Portuguese debt has eased recently, a sign of recovering credibility on financial markets, which had shown concern that a Greek-style crisis might spread to other weaker members of the eurozone.

The latest issue attracted bids that were 3.2 times the value of the bonds being offered, the head of the debt management office IGCP, Alberto Soares, told AFP.

The yield came to 1.036 percent compared with 1.097 percent reached during the last 12-month bond issue on February 17.

"It was an excellent operation," Soares said, adding that the markets were "a lot more stable."

This was a reference to a surge of interest rates, or yields, indicated by trading in debt in some eurozone countries considered particularly at risk from high debt and deficits, in the light of the debt crisis in Greece.

The rate payable on Greek 10-year debt has now fallen to close to 6.0 percent, from a high point of about 7.0 percent two weeks ago, but this is still close to twice what the benchmark country Germany has to offer to attract lenders.

The equivalent yield on Portuguese debt has been much lower than in Greece, at around 4.0 percent and has also shown signs of easing.

On Wednesday, the Portuguese government also bought back 300 million euros' worth of treasury bonds, taking the total bought back so far this year to one billion euros.