The Portuguese auction earlier today was a smashing success, of one considers a rise in the Bid To Cover at the expense of an interest rate increase by over 1%, smashing. The 4 Year bond came at 4.695%, while the 10 Year priced at 6.242%, both printing 100 bps wider than previous. This mirrors the deterioration seen in the recent Ireland bond auction, where the same dynamic was observed. The European periphery is paying ever more to roll its maturing debt. Just wait until these countries have to refi short-term debt at 2%+ differentials: not even the ECB will be able to save the countries from that particular toxic debt spiral.
- €0.45bln, 3.6% 15-Oct-14, bid/cover 3.5 vs. Prev. 3.1: yield 4.695% vs. Prev. 3.621%
- €0.3bln, 4.8% 15-Jun-20, bid/cover 4.9 vs. Prev. 1.8: yield 6.242% vs. Prev. 5.312%