What success? Portugal’s sovereign debt auction just a good deal for the banks

Portugal’s government bond sale this week – the first since January 2013 – was heralded in the national and international press as a storming success, and coming after a similar ‘success’  for Spain’s first big debt auction of 2014 and a ‘popular’ bond sale by Ireland, apparently indicated a sign of a turnaround in the eurozone economy.

But the leader of Portugal’s radical Left Bloc Mariana Mortágua dismissed suggestions that the country was in a better position than when it accepted a punishing 78-billion-euro Troika ‘bailout’ programme on May 17 2011, arguing instead that the sovereign debt sale was simply ‘a good deal for international bankers .”

Reacting to the news that Portugal has sold 3.25 billion euros in debt five years with an interest rate of 4.657%, the Left Bloc MP Mariana Mortágua said that “this is still a good deal for the international private banks, who borrow money at 0 % from the [European] central bank and then lend to Portugal at close to 5 %.”

“We have more unemployment, more bankruptcies, more income inequality, more poverty in the country. It is simply not true that the country is now in a better economic situation than it was three years ago,” she said.

Portugal’s bond sale showed it can raise its own financing as it prepares to exit a 78-billion-euro bailout programme on May 17, less than three years after it was thrown the international lifeline, according to international press reports, which stated that investors ‘clamoured’ for the freshly issued Portuguese five-year bonds, which were sold via a syndicate of banks – Barclays, Caixa BI, Goldman Sachs, HSBC , Morgan Stanley and Societe Generale.

A third straight year of financial austerity awaits Portugal after the bailed-out country’s president signed the 2014 national budget into law at the end of last month. Among the latest money-saving measures, the annual spending plan includes a pay cut of up to 12 percent for government workers who earn more than 675 euros ($930) a month.

Find our more here about the Troika ‘success’ story in Ireland