Portugal Borrows at 3.897 Percent Over Ten Years, Its Costliest Ten-Year Bond Auction Since at Least 2014
The IGCP raised 1,283 million euros on Wednesday, with ten-year money costing 3.897 percent and 26-year money 4.316 percent, as demand thinned. It was the last bond auction of 2026.
Portugal paid 3.897 percent to borrow for ten years at a Treasury bond auction on Wednesday 14 October, the highest rate the state has accepted at a ten-year auction since at least 2014, according to the business daily ECO. The same morning it raised a further 514 million euros over 26 years at 4.316 percent.
The debt agency IGCP held two auctions at 10:30. It sold 769 million euros of the OT 3.25% bond maturing on 13 June 2036 and 514 million euros of the OT 1% bond maturing on 12 April 2052, both in the competitive phase, according to the IGCP's results notice. That makes 1,283 million euros in total, near the bottom of the 1,250 to 1,500 million euros the agency had signalled on 9 October. The IGCP's notice gives the amounts placed; the yields and demand figures below are as reported by ECO.
A record in the published series
ECO compared the result with the IGCP's own series of bond auction results, which begins in 2014. The previous high was 3.5919 percent, paid on 23 April 2014 for 750 million euros. The last time the IGCP sold this June 2036 line, on 8 July this year, it paid 3.439 percent for 703 million euros, so the rate has risen by 45.8 basis points (0.458 of a percentage point) in just over three months. In May, the ten-year auction rate of 3.452 percent had already been the highest in 12 years.
Demand also thinned. Investors bid for 1.62 times the ten-year amount sold, down from 2.38 times in July. On the 2052 bond, bids covered 1.76 times the amount placed, against 1.93 times at the last comparable auction, on 9 July 2025, when the IGCP sold 610 million euros at 3.780 percent. The latest 26-year rate is 53.6 basis points higher.
The auction closes the year's bond programme. In its 9 October announcement, the IGCP said this ninth auction completes the 2026 Treasury bond financing programme because the state's net cash needs have fallen, and that no further bond auctions or syndicated issues are planned before the end of the year.
Why rates have risen
The auction follows weeks of rising yields in the secondary market, where Portugal's ten-year rate broke through 4 percent on 25 September for the first time since March 2017. Presenting the 2027 budget on 8 October, Finance Minister Joaquim Miranda Sarmento said the increase reflected market risk rather than country risk, Observador reported. The budget report says the gap between Portuguese and German ten-year yields has held at around 40 basis points.
What it means for the public purse
A bond yield is the state's cost of borrowing, and the budget report expects the average rate on Portugal's debt to keep rising, reflecting the increases of recent months. The 2027 budget proposal puts the interest bill at 8.22 billion euros next year, a rise of about 23 percent. ECO calculated that this is 429 million euros more than the 7.79 billion euros set aside for the Education programme, the first time since 2018 that interest has overtaken Education. The budget report estimates that a rise of 25 basis points across all maturities would add about 127 million euros to interest costs in national accounts terms.
For savers, these auctions do not set the return on retail state savings products. The IGCP fixes the savings certificate rate separately each month: the gross rate on new Série F certificates is 2.500 percent for October.
