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Portugal bond rates rise amid political crisis

July 17, 2013

LISBON, Portugal (AP) — Investors have demanded higher interest rates to buy Portuguese bonds amid a political crisis that has forced the country’s main parties to work together on finding a way to strengthen the economy.

An auction for 1.2 billion euros ($1.6 billion) of 12-month paper fetched a rate of 1.72 percent, up from 1.23 percent for a comparable sale in May. The rate for 5-month bonds was 1.05 percent for the sale of 300 million euros, up from 1.04 percent a month ago.

The parties have set a deadline of this weekend to hammer out a way to prevent an early election and solve the country’s financial problems. Bailed-out Portugal is weary of its financial woes, and the government almost collapsed two weeks ago when coalition partners disagreed over austerity.

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