Portugal sells 1 billion euros of 2-year bonds (MarketWatch) (09-03-2011)

LONDON – Portugal sold 1 billion euros of 2-year bonds on Wednesday while saw borrowing costs jump sharply. The government debt agency sold the bonds at a yield of 5.993%, up from 4.086% in a sale last September and bids exceeded supply 1.6 times, down from 1.9 in the September auction.

Portuguese bond yields have jumped sharply in recent weeks on rising fears the country will be forced to seek a bailout. The yield on 10-year government bonds neared 7.8% earlier Wednesday, the highest since the launch of the euro in 1999.

The cost of insuring Portuguese debt against non-payment continued to rise in the wake of the auction, with the spread on 5-year Portuguese credit default swaps widening to 502 basis points from around 486 basis points on Tuesday, according to data provider Markit.

That means it would cost $502,000 annually to insure $10 million of Portuguese debt against default for five years, up from $486,000 on Tuesday.

Source: MarketWatch