Portugal aims to raise $17.7B in bonds this year

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LISBON, Portugal (AP) - Portugal's government debt agency said Wednesday it plans to raise up to 13 billion euros ($17.7 billion) from bond sales this year as the country recovers from a financial crisis that forced it to ask for a bailout.

Portugal needed a 78 billion-euro international rescue in 2011 when investors, spooked by the government's high debt burden and financial turmoil in the wider eurozone, demanded unaffordable interest rates to lend it money. That financial aid runs out in the middle of this year.

The Portuguese economy emerged from recession last year, and the government last week sold five-year bonds in the first issuance of its kind since the bailout as investor appetite returned.

The debt agency said it estimates Portugal's net borrowing needs at around 11.8 billion euros in 2014.

In the latest sign of renewed market confidence, Portugal paid sharply lower interest rates and recorded strong market demand as it raised 1.25 billion euros Wednesday in a sale of short-term debt.

It sold 1.01 billion euros of 12-month Treasury bills at a rate of 0.869 percent, down from 1.49 percent at a similar auction last November, with demand for more than twice the amount. The rest was in 3-month bills at a rate of 0.495 percent, compared with 1.07 percent two months ago, and demand was close to five times the amount on offer.

"I really didn't expect such low rates," said Filipe Silva, debt manager of Lisbon-based financial group Banco Carregosa. "The truth is that the risk that investors associate with Portuguese debt is going down a lot."

(Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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