LISBON: Portugal’s government bonds fell for a fifth day, the longest run of declines since February, as the nation faced the prospect of a fine for breaching budget-deficit limits.
Yields on the nation’s 10-year securities have steadily climbed from the three-month low reached on July 1. Portugal was hit last week by an unprecedented European Union move to penalize it, along with Spain, for exceeding deficit limits designed to avert another debt crisis. That was just the latest challenge for a country that also suffers bad loans in its banks and whose government is reversing some of the reforms introduced under its bailout.
“Portugal has been a problem child in the periphery space,” said Marius Daheim, a senior rates strategist at SEB AB in Frankfurt. Its bonds have been hurt “since the new government canceled some of the previous reform and austerity measures. Portugal is now back in the spotlight.” The 10-year bond yield rose four basis points, or 0.04 percentage point, to 3.12 percent as of 4:19 p.m. London time. That’s up from as low as 2.91 percent on July 1.The 2.875 percent security due July 2026 fell 0.355, or 3.55 euros per 1,000-euro ($1,105) face amount, to 97.91.
Yields on similar-maturity German bonds rose two basis points to minus 0.17 percent. The extra yield Portuguese bonds offer over these benchmark securities widened for a fifth day to 3.29 percentage points. Yields on Spanish 10-year bonds climbed two basis points to 1.17 percent, while those on Italian securities due 2026 advanced two basis points to 1.21 percent.
