Portugal sells €1.25 bn treasuries ahead of bailout exit

Portugal on Wednesday auctioned 1.25 billion euros of short-term debt as it seeks to shore up its finances ahead of exiting its international aid programme next month. Lisbon sold 925 million euros' worth ($1.28 billion) of year-dated treasuries at 0.597 percent interest, down from 0.602 percent in March, the state debt management agency said. Portugal's IGCP agency also sold 325 million euros of nine-month treasuries at 0.487 percent, a sharp drop compared to the 1.714 percent it paid in October. The falling rates point to growing confidence among investors in the health of Portugal's economy as it prepares to exit a three-year bailout programme on May 17. Last week the Fitch ratings agency raised the outlook on Portugal's BB+ rating from "positive", raising the prospect it may soon rejoin investment-grade ranks. Yet the relatively low demand for the year-dated treasuries, which had a 1.6 times subscription rate, points to lingering doubts among investors over Portugal's long-term stability. Despite strict austerity measures enforced by Lisbon, Portugal's public debt of accumulated past deficits rose to 129.0 percent of output last year, up from 124.1 percent in 2012. The shorter dated nine-month treasuries auctioned Wednesday were in more demand, with a subscription rate of 4.1 times.