Portugal is discussing the possibility of accepting international aid for financing its sovereign debts after the latest bond issue saw a huge jump in yields, according to Financial Times. As the Tuesday auction of €1 billion in short-term government debt saw a surging premium for financing debt, Portugal opened talks with the European Union for a solution for the country’s immediate borrowing needs while a bailout deal is negotiated. The move also follows the downgrade of the country’s long term-credit rating by Moody’s Investors Service on Tuesday.

The bond sale on Tuesday saw yields on €560 million in six-month Treasury bills jump to 5.11% from 2.98% one month earlier, while the yield for €450 million in one-year bonds jumped to 5.9% from 4.33% about one year earlier. Filipe Silva, head of public debt trading at Banco Carregosa said that the sale was successful, but warned, “The yields are prohibitive,” and the surge was linked to parliament’s failure to approve austerity measures. Pressure has increased for Portugal to acquire a bridging loan from the international community to meet immediate needs, and Moody’s added that a financial rescue package was urgently needed.

Click here to read the story on bailout talks from Financial Times.

Click here for coverage of the latest bond issue from Financial Times.