ECB bought 24pc of bonds at Lisbon sale

THE European Central Bank (ECB) was forced to restart its special bond purchasing programme at an auction of Portuguese debt two weeks ago, figures out yesterday revealed.

It bought €711m (£559m) worth of debt in an effort to bring down yields during Portugal’s last €3bn sale on 10 February, during which the sovereign’s 10-year debt costs spiked to all-time Eurozone high of 7.6 per cent before dramatically retreating on what many assumed was ECB intervention.

The figures out yesterday confirm that the bank waded into the market: estimates had ranged as high as €2bn, but the €711m figure still means the ECB bought 24 per cent of the day’s issuance.

New Edge bond strategist Bill Blain told City A.M.: “Every time Portugal has to do a bond issue, the ECB has to buy a shed-load of bonds.”

Vliet expects next week’s figures to show continued intervention to stem the rise of Portuguese yields.

The ECB does not buy bonds directly on the primary market during its interventions, however, but purchases at market prices on the secondary market to bring yields down.

Meanwhile, Portuguese finance minister Fernando Teixeira dos Santos said yesterday that the country did not see the need for an international bailout, and preferred to procure funds from the market. Portugal has already procured two-thirds of total funds needed for bond redemptions in April and June, he told Japan’s Nikkei newspaper.