Lisbon, Portugal (AP)—Europe won some further modest respite from its raging debt crisis Wednesday as Germany and Portugal became the latest eurozone countries to borrow with relative ease.
Both countries saw their borrowing costs dip at the auctions, in a further sign that investors may have temporarily put some of their concerns over Europe's debt crisis to one side at the start of the New Year. Italy and the Netherlands have also managed to sell their debt over the past week or so in a fairly trouble-free manner.
Germany, the biggest contributor in Europe's bailouts, managed to sell €4.06 billion ($5.3 billion) in its benchmark 10-year bonds at an average yield of 1.93 percent. That was down on the previous 1.98 percent it had to pay.
Meanwhile, Portugal, which was bailed out last April after being locked out of international markets, paid a markedly lower interest rate to borrow €1 billion ($1.3 billion) in three-month Treasury bills. The rate fell to an eight-month low of 4.346 percent and was sharply down from the 4.873 percent rate it had to pay in a similar auction last month. Though Portugal cannot tap long-term bond markets at a reasonable price, it has sought to maintain a market presence by issuing shorter-term debt.
Analysts said the improvement may represent a sign that Portugal is regaining the markets' confidence as it carries out spending cuts and revenue increases in return for its €78 billion ($102 billion) bailout.
"There's been an improvement in the risk perception of Portuguese debt, which has driven rates down," said Filipe Silva, debt manager at Portuguese financial group Banco Carregosa. "Now we just need to see whether it holds."
Germany can borrow cheaply and for longer because its finances are among the strongest in the eurozone but concerns about the costs of bailing out other countries have raised questions about its finances, too. The German auction was closely watched after a bond sale late last year failed to sell a third of the bonds on offer.
Though better than November's auction, which raised fears that Europe's debt crisis was spiraling out of control, there was some concern voiced over the amount of German bunds investors actually wanted.
Bids for €5.14 billion ($6.7 billion) worth of bonds exceeded the full amount on offer of €5 billion ($6.5 billion), but only barely, counting the €943 million the government kept back for secondary market operations.
