11 MAR 2011
By Paul Dobson and Garth Theunissen | Bloomberg
The yield on Portuguese five-year debt reached a euro-era record amid speculation the nation may be nearing a request for financial aid. Bunds rose for a third day as stocks fell after an earthquake struck northern Japan.
Ten-year Portuguese bonds fell for a fifth day. When asked whether his country was preparing to request a bailout, Finance Minister Fernando Teixeira Dos Santos said European leaders must understand the “seriousness” of the region’s debt crisis. He made the remarks at a press conference in Lisbon before a European summit later today. Spanish and Italian bonds jumped, while Irish and Greek securities fell.
The minister’s comments “might indicate that financial support for Portugal will be discussed at the weekend,” said Michael Leister, a fixed-income analyst at WestLB AG in Dusseldorf, Germany. “Yields show that the market is concerned, and is waiting for something,” he said.
The yield on the Portuguese five-year bond rose 22 basis points to 7.99 percent as of 4:45 p.m. in London, the most since at least 1997 when Bloomberg began collecting the data. The 6.4 percent securities maturing in February 2016 dropped 0.83, or 8.30 euros per 1,000-euro ($1,386) face amount, to 93.725. The yield premium for the securities over similar-maturity German debt widened to a record 546 basis points, or 5.46 percentage points.
The 10-year yield was 10 basis points higher at 7.74 percent. Credit-default swaps on Portuguese government debt rose 14 basis points to 520, the highest since Jan. 11, according to CMA. Contracts on Greece rose 8 basis points to a record 1,048.
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