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By John Geddie
LONDON, Jan 22 (IFR) - The Republic of Portugal, rated Ba3/BB/BB+, is set to return to the bond market for the first time since it received a bailout in 2011 with a tap of its benchmark five-year bond, a bank managing the deal said on Tuesday.
Barclays, Banco Espirito Santo, Deutsche Bank and Morgan Stanley have been mandated by the country’s debt agency to re-open the 4.35% October 2017 bond.
The deal is expected to come to market as early as Wednesday, said the bank.
Portugal’s October 2017 bond was trading at mid-swaps plus 395bp when the tap was announced, and bid at a yield of 4.92%, according to Reuters data.
Yields on Portugal’s five-year bond dipped below 5% this month for the first time since the country was bailed out in May 2011, and down from highs of over 23% in early January last year.
Portugal’s government encouraged its debt agency to take advantage of improving market sentiment to issue new bonds and bills with an eye to a full return to markets ”as soon as possible.
At the time, debt agency chief Joao Moreira Rato was in the United States on a roadshow organised by Citi, Morgan Stanley and StormHarbour, and was reported to have received some strong interest in its paper.
The new deal will come hot on the heels of a EUR7bn 10-year sale from Spain which priced on Tuesday, and a EUR6bn 15-year bond issue from Italy last week.
Another bailed-out eurozone country, Ireland, received over EUR7bn orders when it increased its 5.5% October 2017 bond by EUR2.5bn two weeks ago. That deal marked Ireland’s first outing in syndicated markets since January 2010, keeping the sovereign on track to exit its bailout programme at the end of the year. (Reporting By John Geddie; editing by Alex Chambers)