LONDON: Portugal's 10-year bond yield reversed falls on Thursday after reports that a Lisbon court has provisionally suspended a central bank decision to transfer bonds from "good bank" Novo Banco to Banco Espirito Santo.
TSF radio reported the court had set an injunction against the decision made by the Bank of Portugal in December, which has prompted a storm of complaints by investors.
Daily Diario de Noticias said the transfer of 1.985 billion euros of bonds, which had boosted Novo Banco's balance sheet, would be suspended until the Bank of Portugal responds to the court.
The Bank of Portugal is trying to sell Novo Banco.
Portugal's 10-year bond yield was flat at around 3.03 percent, having been 4-5 basis points lower earlier in the day in line with a broad decline in euro zone bond yields.
"If it is a suspension, then this is a win for international law," said Rabobank fixed income strategist Lyn Graham-Taylor.
"But it is not good news for the Portuguese state or domestic creditors, so it makes sense that Portuguese yields have risen."
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