MNI INTERVIEW: Portugal Eyes 10-Yr Benchmark, Could Tap 30-Yr

Portugal could issue a new 10-year benchmark bond this year, and could also tap its recently-issued 30-year debt, the head of the country's debt management agency told MNI in an interview.

"Market conditions have been very supportive and we have benefitted from strong demand across all investor categories and geographies (particularly in Europe)," Portuguese Treasury and Debt Management Agency President Cristina Casalinho said in an emailed response to questions. "Demand stays skewed to the 10-year-plus area which has allowed to term out the debt while reducing the overall funding costs."

Portugal launched a new 30-year benchmark earlier in February, she noted, adding that traditionally Portugal opens two lines per year.

"Given that Portugal has not yet issued a new 10-year benchmark, that is still a possibility for a new syndication in 2021," Casalinho said, when asked about possibilities for that maturity.

ECB SUPPORT

The country is also planning to tap the new 30-year, "but relevant demand allowing us to reopen this line via auction will be needed," she said.

European Central Bank pandemic emergency support measures have played a major role in supporting sovereign debt markets, she said, when asked about what to expect when monetary stimulus is eventually reduced.

"As uncertainty receded and we enjoy a more upbeat economic outlook, is understandable to have central banks rolling back some monetary support measures," she said. "A combination of lower uncertainty, better economic prospects and some backtracking of central banks will induce curve steepening and yields backing up (as we are already starting to witness)."

For the moment, Portugal is not considering sales in foreign currency, or in the 50- or 100-year brackets, she said. Green bond issuance is still being assessed, she said.