Thursday , December 9 2021

The last issue of debt this year is to pay to the IMF.


The Treasury has actually completed its funding plan for this year. But the new redemption of the International Monetary Fund (IMF) will lead to other financial operations next Wednesday. The Treasury Department and the Public Debt Administration (IGCP) said Wednesday they expect mid – to – long – term financial operations to be between € 150 and € 12.5 million on 5 – year and 10 – year bonds.

The country has already issued $ 15 billion since the beginning of this year. Although it was the target of the 2018 gross amount, planning additional refunds of funds would create new issues and total annual gross savings of over € 16 billion. "Through this auction, IGCP plans to use some of its IMF loans as a prepayment," said Cristina Casalinho.

Assistant Secretary of State Ricardo Mourinho Félix has already informed this option when intervening in Parliament. In an interview with the Economic Journal, he stated that the Treasury is going to redeem 2 billion euros by the end of the year.

The strategy to repay the IMF began with the previous government in 2015. Since then, more than 80% of the loans granted by the Fund can be repaid in advance and interest can be saved. The value borrowed by investors is much lower than the IMF's interest rate.

Christine Lagarde's lead agency has more than $ 26 billion in initial loans. The € 46 million will still be cut. However, Portugal needs formal authorization by the European stabilization mechanism to make additional repayments to the IMF.

Focus on Italy.

The financing work planned by the IGCP will take one day after the deadline for the Italian government to respond to concerns about the European Commission 's budget plan. And on the Roman side, no big concessions are expected in the clash with Brussels. Finance minister Giovanni Tria said it was "economically suicidal" to reduce the 2.4 percent deficit to 0.8 percent in Brussels, according to Reuters.

Despite the market tensions on Italy, Portugal's interest rates have resisted. In the secondary market, which is a measure of how much the state should pay, investors demand less than 2% to hold 10-year debt in Portugal. Already five years later, the next Wednesday the other period of auctions, the secondary market rate is 0.739%. The average cost of the national debt was 3% in 2017.

Portuguese Treasuries benefited from the trend to improve the Republican rating. In October last year, Portugal achieved its full rating after Moody's withdrew its rating from what investors saw as garbage. It is the first time since the crisis that Portugal has entered the market with an investment grade rating granted by the most influential institutions.

Moving to the market was already anticipated by Commerzbank analysts. Portugal will compete next week for money from investors in Italy, Germany and the Netherlands. But even so, the German bank predicted that there should be no major setbacks in the placement of these bonds on the note that live money is accessible.

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