Mixed results in Portuguese debt auction

Yields rose sharply on debt due in four years in the latest Portuguese bond auction, but fell on debt due in 10 years after European Central Bank (ECB) intervention on Monday, according to the Financial Times.

The rates on four-year debt rose from 4.04% in late October to 5.39%. But the 10-year rates decreased from 6.8% to 6.71%, below what Portugal considers to be the danger-zone level of 7%.

The European Central Bank intervened in the markets earlier this week to push Portuguese yields back from more than 7% to the 7% mark, where they remained today.

The rates are unlikely to satisfy investors Portugal does not need a bailout. Portugal has had severe difficulties reducing its deficit, or supply of new debt, to match the reduction in demand. (article continues below)

The country has also admitted it is likely to fall back into recession next year, which is likely to hit tax receipts and potentially increase the country’s reliance on borrowing.