Portugal managed to raise about euro1 billion ($1.4 billion) in a Treasury bill sale Wednesday but paid a high rate for the cash as it appears inevitable the debt-stressed country will soon need a massive bailout.
The government debt agency sold euro560 million in T-bills that mature in October and euro450 million in bills maturing in March next year.
But investors asked for high interest rates -- 5.11 percent and 5.9 percent -- to part with their money. In similar auctions last month, Portugal paid a rate of just under 3 percent on 6-month bills and 4.3 percent on 12-month bills.But wait, it gets better:
Reuters: Two business newspapers said the public social security fund has been selling overseas financial asets in the last few days to help finance the state by buying sovereign debt at auctions.
Back to AP: The president of the Portuguese Association of Banks, Antonio de Sousa, said substantial financial support is "urgent." "The banks have no more credit left to give," he was quoted as saying Wednesday by national news agency Lusa.Bottom line: Portugal has no government, its borrowing costs are soaring, banks are no longer willing buyers so the social security fund has had to step in to buy rapidly depreciating bonds. Does this sound like it is going to end well?
The good news: Overseas investors willing to roll the dice at the Portugal table are getting fat yields and an appreciating currency:
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