Portugal Looks to Issue Bonds in Coming Months
Lisbon Explores Borrowing More Through an Existing Bond Program
WASHINGTON—Portugal is seeking to borrow more from investors in coming months as it returns to economic growth and works to wean itself off international aid, Finance Minister Maria Luis Albuquerque said Saturday.
The European countries that received bailouts from the International Monetary Fund, the European Union and the European Central Bank are sizing up investor sentiment in the debt markets, a key measure of whether they have regained a firm enough financial footing to exit the bailout programs. Ireland is the first country scheduled to regain its financial independence later this year by exiting the programs, followed by Portugal in mid-2014.
"We have to have full market access before then," Ms. Albuquerque said in her first media interview.
In her first interview since becoming Portugal's finance chief in July, Ms. Albuquerque said her government is looking into borrowing more through an existing bond program in the coming months, depending on market conditions. Lisbon could also offer to swap an existing bond for another with a longer maturity, or issue a new dollar-denominated security, she said. But Portugal isn't likely to issue a new bond before early next year, she said.
The Portuguese government is fully funded for this year, and the finance ministry calculates it has net financing needs of €10 billion for next year, she said.
Investors' views of Portugal has been improving since the country, along with many other countries in the region, returned to growth in the second quarter, driven by tourism and exports. Sentiment toward Portugal got another boost earlier this month when its lenders said the country was broadly meeting the budget targets set for as conditions for its bailout loan.
The so-called troika of lending institutions also revised its growth forecasts upward, saying it sees the Portuguese economy expanding by 0.8% in 2014, up from the previous 0.6% forecast.
"All indicators are pointing to signs of life in the economy," Ms. Albuquerque said. "Portugal this year has had its best tourist season ever."
Some investors were concerned earlier in April when Portugal's Constitutional Court struck down a series of government spending cuts designed to help the country meet the budget targets set by the terms of its €78 billion ($105.63 billion) bailout, forcing the government to scramble to find other ways to save money.
Two months later, two ministers, including the former finance minister, Vitor Gaspar, resigned amid increasing pressure to scale back the program, which has been blamed for a three-year recession and a jump in unemployment to more than 17%.
Prime Minister Pedro Passos Coelho appointed Ms. Albuquerque to the key financial post and vowed to continue implementation of the bailout program.
The next hurdle the government faces is a 2014 budget that lowers the deficit to 4% of gross domestic product from a forecast of 5.5% of GDP this year, as required by the terms of its bailout, without running afoul of the country's Constitutional Court. Ms. Albuquerque says the government is trying to impress upon the court the need lower the country's high debt levels and meet its EU commitments in order to avoid further conflict.
"It's been a learning process; we've been working to minimize the risk," she said.