ECONOMY

In Brief

Portugal passes bond test, pressure eases for now LISBON (Reuters) – Debt-ridden Portugal passed a key market test yesterday, selling its benchmark 10-year bond at a lower yield than in the previous auction while demand was strong, lifting some pressure off the country to seek a bailout. Finance Minister Fernando Teixeira dos Santos told Reuters foreign investors had snapped up 80 percent of the placement, which he said would help Lisbon resist following Ireland and Greece in seeking international aid. The government sold a total of 1.249 billion euros ($1.62 billion) in two bond maturities – at the very top end of the initially indicated offer of 1.25 billion euros – in its first bond sale of the year. «We consider today’s bond auction a success,» Teixeira dos Santos said. «We see no reason to abandon the strategy of raising financing in markets and diversifying our investor base.» Analysts welcomed the result, though they said bond-buying by the European Central Bank was largely responsible for keeping a lid on yields and pointed to greater challenges ahead as the government seeks billions more in funding later this year. «I think Portugal has passed this test, though of course the pressure is not off just yet. There was good volume sold, right at the top of the indicative amount,» said Orlando Green, debt strategist at Credit Agricole in London. «The strong demand shows that there is still appetite, and it shows there are sufficient investors out there who think Portugal and the eurozone can solve the country’s problems before a possible bailout,» he said. Bank of Portugal Governor and European Central Bank Governing Council member Carlos Costa also said the bond sale showed improving investor confidence in the country. The average yield on the June 2020 bond fell to 6.716 percent from 6.806 percent in the previous sale in November. The October 2014 bond yielded 5.396 percent, up from 4.041 percent in October’s auction, but came in below secondary market rates. Romtelecom set to slash up to 1,400 jobs in 2011 BUCHAREST (AFP) – Romanian telecom operator Romtelecom, a subsidiary of Greek telecom major OTE, will slash between 1,000 and 1,400 jobs in Romania in 2011 to reduce costs, the company said yesterday. «We are operating in an extremely competitive market, with some of the lowest prices in Europe for telecom services, and we need to be able to improve our capability to deliver more with fewer resources,» Romtelecom CEO Giorgos Ioannidis said in a press release. At the end of 2010, Romtelecom employed around 8,600 people. Broadband and TV will remain priorities for Romtelecom in 2011, Ioannidis said. OTE, the major telecom operator in Greece, currently holds 54.01 percent of Romtelecom. The Romanian state holds the remaining 45.99 percent of the shares. Power proposal Greece yesterday proposed to the European Commission that the country further liberalize its energy market by exchanging lignite-powered capacity produced by Public Power Corp SA. Under the proposal, PPC would swap electricity produced from lignite for power of an equal value from a producer in another European Union country, the Environment, Energy and Climate Change Ministry said in an e-mailed statement. According to the proposed framework, PPC will offer to swap electricity until 2020 produced in power units that will cease to operate that year or from units that will function beyond 2020, where contracts will last 15 years with the possibility of five-year renewals, according to the statement. (Bloomberg) Romanian goals Romania’s central bank is unlikely to change interest rates as it battles to slow inflation, which accelerated to the fastest pace in more than two years after a tax increase boosted prices, Governor Mugur Isarescu said yesterday. The Banca Nationala a Romaniei’s main goal in 2011 will be to damp inflation prompted by a 5 percentage point increase in the value-added tax in July, Isarescu said during an interview in the capital Bucharest. The inflation rate increased to 8 percent in December, more than double the 3.4 percent forecast for the end of this year. The first-round effects of the value-added tax increase have been «reasonable,» allowing the central bank to keep its main interest rate unchanged for a fifth meeting on January 5 at a record-low 6.25 percent, the central bank governor said. (Bloomberg)