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| Version 1 | Version 2 |
|---|---|
| Portugal bond auction raises 1.25bn euros | Portugal bond auction raises 1.25bn euros |
| (about 6 hours later) | |
| Portugal has raised 1.249bn euros (£1.04bn; $1.62bn) in an auction of four and 10-year bonds. | Portugal has raised 1.249bn euros (£1.04bn; $1.62bn) in an auction of four and 10-year bonds. |
| The yield, or the interest rate Portugal must pay to borrow funds, on the 10-year bond was an average 6.719%. | The yield, or the interest rate Portugal must pay to borrow funds, on the 10-year bond was an average 6.719%. |
| Markets had been watching closely to see how easily - or not - the debt-hit nation could raise funds. | Markets had been watching closely to see how easily - or not - the debt-hit nation could raise funds. |
| Yields had hit a recent fresh high on its 10-year bonds of 7.3%, before falling to 6.77% on Wednesday morning before the auction. | Yields had hit a recent fresh high on its 10-year bonds of 7.3%, before falling to 6.77% on Wednesday morning before the auction. |
| 'Bail-out worry' | 'Bail-out worry' |
| The sale was seen as a measure of Lisbon's ability to raise funds on the financial markets after its debt and deficit problems raised the amount it had to pay to borrow cash. | The sale was seen as a measure of Lisbon's ability to raise funds on the financial markets after its debt and deficit problems raised the amount it had to pay to borrow cash. |
| "But even with this auction, most now consider it a question of when, not if, Lisbon will join the list of eurozone governments turning to Europe and the IMF for emergency support," said BBC economics editor Stephanie Flanders. | "But even with this auction, most now consider it a question of when, not if, Lisbon will join the list of eurozone governments turning to Europe and the IMF for emergency support," said BBC economics editor Stephanie Flanders. |
| "European policy makers - and investors - worry about a Portuguese bail-out, not because of any inherent concern for that country, but for what it symbolises - and for what might happen next." | "European policy makers - and investors - worry about a Portuguese bail-out, not because of any inherent concern for that country, but for what it symbolises - and for what might happen next." |
| 'ECB active' | 'ECB active' |
| Bond buying by the European Central Bank (ECB) had helped keep the yield below 7%. | Bond buying by the European Central Bank (ECB) had helped keep the yield below 7%. |
| "Probably the most important thing for the 10-year yield is that the 7% level was not breached," said Michael Leister, of West LB in Duesseldorf. | "Probably the most important thing for the 10-year yield is that the 7% level was not breached," said Michael Leister, of West LB in Duesseldorf. |
| "The ECB have been very active in past days stabilising the market and sentiment. | "The ECB have been very active in past days stabilising the market and sentiment. |
| "It remains to be seen over the coming trading session whether this will be a turnabout for Portugal and whether recent spread tightening can be sustained." | "It remains to be seen over the coming trading session whether this will be a turnabout for Portugal and whether recent spread tightening can be sustained." |
| The four-year bond yield was 5.396%. | The four-year bond yield was 5.396%. |
| Bail-out? | Bail-out? |
| There has been speculation Portugal could join Greece and the Irish Republic in needing an international bail-out, something it has denied. | There has been speculation Portugal could join Greece and the Irish Republic in needing an international bail-out, something it has denied. |
| The country's borrowing costs have surged as investors worried over its financial health. | The country's borrowing costs have surged as investors worried over its financial health. |
| Lisbon has argued its situation is different from Greece and the Irish Republic - both of which have agreed to bail-outs from the European Union and International Monetary Fund. | Lisbon has argued its situation is different from Greece and the Irish Republic - both of which have agreed to bail-outs from the European Union and International Monetary Fund. |
| It says that its deficit and debt are lower than those nations, that it has not suffered a bubble in property prices and that its banks are sound. | It says that its deficit and debt are lower than those nations, that it has not suffered a bubble in property prices and that its banks are sound. |
| And the European Commission has said there are no discussions under way on an EU-International Monetary Fund bail-out of Portugal. | And the European Commission has said there are no discussions under way on an EU-International Monetary Fund bail-out of Portugal. |
| However, some analysts still believe the country will need to seek funding help. | However, some analysts still believe the country will need to seek funding help. |
| "Our country analysts still forecast that Portugal will be required to receive funds from the emergency credit facility," said Kevin Dunning, economist at the Economist Intelligence Unit. | "Our country analysts still forecast that Portugal will be required to receive funds from the emergency credit facility," said Kevin Dunning, economist at the Economist Intelligence Unit. |
| "And there is a high risk that if the interest charged on those funds is as high as for Ireland, this will slow Portugal's efforts to reduce its budget deficit." | "And there is a high risk that if the interest charged on those funds is as high as for Ireland, this will slow Portugal's efforts to reduce its budget deficit." |
| Spanish auction | Spanish auction |
| Analysts believe that while Europe could support Portugal, a bail-out of Spain would stretch the existing bail-out fund. | Analysts believe that while Europe could support Portugal, a bail-out of Spain would stretch the existing bail-out fund. |
| Greece was the first eurozone nation to take a bail-out when a three-year 110bn-euro deal was agreed. | Greece was the first eurozone nation to take a bail-out when a three-year 110bn-euro deal was agreed. |
| The Irish Republic's 85bn-euro bail-out package was agreed last month. | The Irish Republic's 85bn-euro bail-out package was agreed last month. |
| A debt sale due on Thursday by Spain will also be closely watched by investors. | A debt sale due on Thursday by Spain will also be closely watched by investors. |
| Funding call | |
| European Union leaders also renewed their call on Wednesday for eurozone member states to put more money into the bail-out fund for countries that run into financial trouble. | |
| European Commission President Jose Manuel Barroso said the European Financial Stability Facility needed to be extended from its current 440bn euro ($571bn; £366bn) level. | |
| He said the increase was required to reassure markets that the stability of the eurozone was "not in question". | |
| However, Germany - the largest contributor to the fund - has so far ruled out increasing its size. |