In Brief
Portugal sells bonds; price higher for longer date LISBON (Reuters) – Portugal sold 2 billion euros’ ($2.73 billion) worth of two- and 10-year bonds yesterday, drawing a clear line between its debt and Greece’s fiscal woes, though investors priced in higher risk for the longer-dated issue. The country accepted buyers for 1.195 billion euros of government bonds maturing in 2020 at an average yield of 4.340 percent and 805 million of two-year bonds at 1.715 percent. It had hoped to raise between 1.5 billion and 2.0 billion euros in total. Analysts said the sale showed Portugal faced no challenges in issuing debt on a par with Greece, after some economists had identified Portugal as the next possible weak link in the eurozone. But the market continued to price in risk as premium investors’ demand to hold 10-year Portuguese government bonds rather than eurozone benchmark German Bunds rose five basis points to 129 bps after the sale, its widest since last week. «The short-dated issue seems to have been absorbed without too much trouble, as reflected by the good bid/cover and yield premium, but the long dated was more difficult to absorb, looking at post-trading,» said Orlando Green, strategist at Credit Agricole CIB in London. Greece a ‘front-row preview’ for further sovereign debt crises Greece is a «front-row preview» for a wave of further sovereign debt crises in other member countries in the Organization for Economic Cooperation and Development, a Societe Generale economist said. «The Greek tragedy of being unable to pay for the debt built up during the years of unprecedented low yields reads across to the rest of our governments all too well,» London-based Societe Generale economist Dylan Grice wrote yesterday in a note to clients. «The fact is most of us are living on the same knife edge.» (Bloomberg) EU court The European Commission said yesterday it would take Greece to court to force Hellenic Shipyards to repay the Greek government some 230 million euros plus interest in illegal subsidies. EU regulators say Greece broke state aid rules with a series of payments, loans and guarantees to the troubled former state-owned shipyard between 1996 and 2002 that it failed to clear with EU authorities. The European Court of Justice, the EU’s highest judicial authority, could ultimately order Greece to collect the money under threat of daily fines. Athens also sold a 49 percent stake in Hellenic to its employees for 24 million euros over 12 years. The EU said Greece never collected that money and gave the shares away to workers for free. Loans and guarantees from the state and a state-owned bank to the yard were also provided at either below-market prices or at a time when the company was in such financial trouble that no normal lender would have given it money, the EU said. Hellenic is now owned by Germany’s ThyssenKrupp Marine Systems which is planning to sell a majority stake to shipbuilder Abu Dhabi Mar, or ADM, the Greek government said last month. ADM would control 75.1 percent of Hellenic Shipyards SA and ThyssenKrupp would retain 24.9 percent of the company. (AP)
