Portugal raises £1bn in bond auction

Portugal has managed to borrow €1.25 billion (£1bn) in a bond auction which saw strong demand, though investors demanded a high return for risking their money on the debt-stressed country.

The auction was seen as a key test of whether Portugal may end up requiring a bailout like Greece and Ireland.

The government debt agency said it sold €650 million in three-year bonds and €599 million in nine-year bonds today. The average yield on the shorter-term loan was 5.4 per cent, up from 4 per cent in the last sale, while the yield on longer bonds was 6.7 per cent — slightly down from 6.8 per cent at the last similar auction.

The agency said high demand meant Portugal could have sold more than double the amount offered.