The European Central Bank was forced to step into the government bond market as yields on Portuguese debt jump following a fresh wave of fears that the country will be forced to seek international aid, according to Financial Times. The central bank jumped into the bond market for the first time in three weeks as 10-year debt on Portugal jumped to a eurozone high of 7.63%, ending the temporary suspension of the ECB bond-buying program that was started in the middle of January.
The concern over Portugal’s finances come as European leaders debate potential changes to the European Financial Stability Facility, with some analysts concerned that officials will fail to reach an agreement to substantially increase the size and scope of the program. Some policymakers and investors are worried that Portugal may struggle to refinance €9.4 billion of debt maturing by the end of the second quarter. Felipe Silva of Banco Carregosa said, “If the ECB wasn’t in the market buying the price would be much higher,” but he added, “Demand has always been buoyant. While demand is there, Portugal won’t need any help.”
