LONDON: Portuguese bond yields slipped nearer seven-month lows on Friday after Lisbon's first 2014 debt sale drew solid demand and ahead of a potential upgrade of the country's ratings outlook later in the day.
Moody's announces its decision on Portugal's credit standing later on Friday under a new EU-regulated schedule of rating reviews. Earlier, S&P affirmed Germany's triple-A sovereign ratings and left them on a stable outlook.
New European Union rules came into force this month making credit agencies operating in Europe say when they will review a country's rating.
Standard & Poor's will release its assessment on Portugal on Jan. 17. While many market participants say an upgrade of Portugal from "junk" status is unlikely, they expected both Moody's and S&P to raise their outlooks.
This, combined with the European Central Bank's ultra-easy accommodative monetary policy - affirmed on Thursday - has fueled demand for the euro zone's higher-yielding bonds, enabling Portugal, Ireland and Spain to successfully launch their first 2014 debt sales this week.
Portuguese 10-year yields were last marginally lower at 5.41 percent as the market paused for breath after a fall of 70 basis points so far this year and before the Moody's decision and US jobs data.
Analysts see scope for further falls in yields.
"It's a bit much to expect an upgrade (of Portuguese ratings) from junk, but there must be some scope for Moody's to upgrade its outlook from stable to positive which may add some modicum of additional support to the bullish momentum in Portugal," said Rabobank strategist Richard McGuire.
Comments
Comments are closed for this article.