Portugal

Millennium BCP, Portugal’s largest listed bank, has successfully completed the first issue of subordinated Tier 2 notes by a Portuguese lender since the eurozone sovereign debt crisis, despite a boycott of the offer by some of the world’s leading fixed-income investors, the Financial Times reported. BCP, which priced the 10-year medium-term notes on Wednesday, said the €300m issue attracted orders for three times that amount from a wide range of mainly European institutional investors. The notes were priced at an interest rate of 4.5 per cent for the first five years.

Portugal’s three biggest banks have agreed to create a jointly managed platform to tackle their bad loans, one of Europe’s largest problem debt piles, the Financial Times reported. Millennium BCP, Novo Banco and state-owned Caixa Geral de Depósitos said in statements to the CMVM, Portugal’s stock market watchdog, late on Thursday that the platform was aimed at “speeding up the reduction of non-performing exposures”. The three banks account for most of an estimated €25bn to €30bn of bad debt in the Portuguese banking system, about 15 per cent of total credit portfolios.

Portugal's three biggest banks plan to manage jointly some of their bad loans to avoid more writedowns, effectively taking on the task of trying to tackle one of Europe's biggest bad-debt burdens, the International New York Times reported on a Reuters story. The banks - state-owned Caixa Geral de Depositos as well as Novo Banco and Millennium bcp - will set up a private platform to manage loans that at least two of them have made to the same corporate borrowers, Deputy Finance Minister Ricardo Mourinho Felix told Reuters in an interview.

Major Novo Banco bondholder Pimco plans to support a restructuring deal at the state-rescued Portuguese lender in a vote this Friday, though the bank could still struggle to get the necessary backing, a source familiar with the matter said. The agreed sale of Novo Banco to U.S. fund Lone Star hinges on investors agreeing to sell back bonds at a discount in the so-called liability management exercise (LME) that runs until Monday, the International New York Times reported on a Reuters story.

Portuguese bonds staged their biggest rally in more than seven years on Monday after the country won back its investment-grade credit rating, marking one of the most significant milestones in the currency union’s return to fiscal health, the Financial Times reported. Portugal had been in junk territory since 2012 after it became the third eurozone country forced into an international bailout, receiving a €78bn rescue from the International Monetary Fund and EU after Greece and Ireland were subjected to similar programmes.

Portugal’s economic growth hit the brakes in the second quarter, in a surprise slowdown for one of the eurozone’s standout economies in recent months, the Financial Times reported. Gross domestic product expanded 0.2 per cent in the three months to June, down from 1 per cent at the start of the year and below a forecast of 0.6 per cent. It means year on year growth held steady at 2.8 per cent – still the best rate in a decade, according to stats office INE.

Novo Banco SA, the Portuguese lender created from the collapse of Banco Espírito Santo SA three years ago, has launched a plan to raise €500 million ($582 million) from a bond exchange—a condition of its takeover by U.S. private-equity firm Lone Star Funds, The Wall Street Journal reported. Pacific Investment Management Co. and other Novo Banco bondholders who wanted to mount their own takeover have challenged the Lone Star arrangement. A successful bond exchange would put the bank a big step closer to securing the Lone Star deal.

António Costa may soon discover that success brings its own problems. Portugal’s proudly anti-austerity prime minister is ebullient after returning the former bailout country to fiscal health and presiding over a robust economic recovery, the Financial Times reported. Lisbon is no longer in breach of the EU’s budget rules — a decision he calls a “turning point” for the country’s international reputation — and the economy looks set for its strongest expansion in almost two decades. Unemployment is falling at one of the fastest rates in Europe.

Portugal’s recovery from the eurozone’s debt crisis reached a milestone on Monday as the EU said the country, which needed an international bailout, was no longer in breach of the bloc’s budget rules, the Financial Times reported. Brussels’ verdict underlines Portugal’s turnround after its rescue by eurozone governments and the International Monetary Fund in 2011 and reflects the improving economic environment for the single currency area, where growth has picked up and unemployment is at an eight-year low.

Portuguese bond yields fell to a five-month low last week amid a broader European relief rally after Emmanuel Macron’s first-round victory in voting for France’s next president. Philip Brown, head of sovereign debt origination at Citi, points out that Portuguese government bonds have been the only eurozone sovereign market to show positive returns in the year so far, returning 3.9 per cent.