Portugal

Portugal brought a dual tranche syndicated tap this week, in what some bankers felt was a disappointment amid a busy market where every other deal went well — but the leads were quick to defend the trade.

Rating: Ba1/BB+/BB+

Portugal breathed some liquidity into a pair of outstanding bonds on Wednesday with its first syndication since January, achieving much lower premiums than its last syndication, according to bankers.

Public sector borrowers have peppered the dollar and euro curves with deals this week, amid a government bond rally that is helping 10 year Bund yields flirt with record lows and the equivalent US Treasury rate near its lowest point in 2016.

Portugal is lining up for its first test of the syndication market since the European Central Bank announced its latest round of monetary easing measures a month ago — measures that have had less effect on Portugal than its periphery peers.

Portugal cut its funding costs at a bond auction and Italy lined up for a sale on Wednesday, as European Central Bank support protected eurozone periphery government bonds from any knock-on effects from a terrorist attack in Brussels on Tuesday.

After a string of strong syndications and auctions from the eurozone periphery during the last seven days, issuers from the region could be set to enjoy even lower yields thanks to the latest monetary stimulus package from the European Central Bank.

Public sector borrowers from the eurozone periphery are preparing a flurry of issuance in the next few days, with one still smarting from a change to its rating outlook late last week.

The Bank of Portugal’s decision to transfer €2bn of bonds from Novo Banco to ‘bad bank’ Banco Espírito Santo was not a succession event, ISDA’s European Determinations Committee ruled this week in a decision that could increase the pain for holders of the affected bonds.

With some of the lowest fertility rates on earth, Europe's periphery nations will struggle to maintain extensive social security obligations, as a shrinking number of workers shoulder the fiscal burden.

Portugal has bought back three government bonds during a volatile week for the sovereign in which it announced it would increase its issuance target for the year.

Portugal is set to buy back bonds maturing over the next three years as its yields dropped to two week lows on Tuesday.