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Portugal issues 1 bln euros in five-year debt following critical DBRS rating

Xinhua, October 26, 2016 Adjust font size:

Portugal issued 1 billion euros (1.09 billion U.S. dollars) of five-year debt on Wednesday, with borrowing costs falling to 1.75 percent, lower than in the previous comparable auction which took place on Aug. 31.

Demand exceeded supply by 1.93 times; bonds mature on April 15, 2021.

The sale follows a key rating review by Canadian rating agency DBRS on Friday, which decided to keep its investment grade rating and a stable outlook for Portugal.

DRBS' decision removed some uncertainty for investors because it means the country's debt is still eligible for the European Central Bank's bond buying program.

Portugal emerged from a deep recession two years ago and is promising to cut its deficit to 1.6 percent of gross domestic product (GDP) next year from this year's estimated 2.4 percent.

The Socialist government's budget for next year focuses on recovering personal income and raising pensions after several years of harsh austerity, while raising indirect taxes to compensate and meet fiscal agreements with Brussels.

However, analysts are cautious, pointing to the country's weak growth and banking sector problems, as pointed out by Fitch Rating agency in a note on Tuesday.

Portugal is expected to sell another 1 billion euros of debt by the end of this year. Endit