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Portugal 10-year bond rate rises over bank concerns

Published on 09/07/2014

The rate on Portugal's benchmark 10-year bond rose sharply on Wednesday amid concern over one of the country's biggest banking groups, an analyst said.

In midday trading on secondary government debt markets, the rate, or yield reached 3.837 percent, compared with 3.648 percent at the close of trade on Tuesday.

“Portuguese assets are under pressure in general, something that might stem from the banking sector,” commented Cyril Regnat, a bond strategist at the French bank Natixis.

He noted that Portuguese debt is subject to wider swings than those of its eurozone peers, meanwhile.

Earlier in the day, the financial news agency Bloomberg quoted Banco Espirito Santo (BES), the biggest Portuguese bank by capitalisation, as announcing delays in payments of short term debt by its parent holding company.

Investors have also begun to shy away from government debt in other peripheral southern eurozone countries.

The rate on Spanish 10-year debt rose on Wednesday to 2.775 percent from 2.719 percent, while that of Italy increased to 2.905 percent from 2.841 percent.

In Germany, the eurozone reference, the rate on the Bund was stable at 1.218 percent.