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Capital Markets

Portugal’s sovereign borrowing agency rebuilds bridges with wary investor base

Portugal’s sovereign borrowing agency is intensifying its focus on re-establishing relationships with existing investors outside the country and developing a dialogue with new ones.

For the government, in particular, intensive overseas marketing has been an urgent priority as it has worked to rebuild an investor base that has undergone a ratings-driven transformation over the past 12 to 18 months. "After the downgrade from S&P at the start of 2012 we lost a large part of our classic investor base, which was the core European institutions," says João Moreira Rato, chief executive of the IGCP, Portugal’s debt management office. "With French and German accounts selling, the priority when I joined the IGCP in June 2012 was to find an investor base that was less ratings sensitive. We roadshowed intensively and US investors played an important role in making up for the loss of core European demand."

The process of re-establishing the sovereign’s credentials in the capital market began in April 2012, with the issue of the government’s first 18-month treasury bill since the loss of its market access. This was followed in September by the successful exchange of a 2013 bond into an issue due in October 2015.

Following the bond exchange in September, the European Central Bank indicated that the government would need to issue a "reasonable amount of bonds" to prove it had the market access necessary to qualify Portugal for the ECB’s outright monetary transactions (OMT) bond-buying programme.

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