UPDATE 1-Portugal 2011 bond issuance lower at 18-20 bln euro

* Down from 2010’s 22 bln euros as budget gap seen lower

* One new bond issue planned in first quarter

* First T-bill auction on Jan. 5

(Updates with analyst, comparison, details)

LISBON, Dec 29 (BestGrowthStock) – Debt-ridden Portugal plans gross
treasury bond issuance of between 18 billion euros ($23.66
billion) and 20 billion euros in 2011, down from this year’s 22
billion euros, the IGCP debt agency said on Wednesday.

Portugal’s borrowing costs have spiked this year on investor
concerns over its public finances, and more recently, over the
possibility that it may follow Ireland and Greece in seeking
outside help to manage its debt.

The government has promised Brussels it will slash the
country’s budget deficit to 4.6 percent of gross domestic
product next year from this year’s projected 7.3 percent, which
analysts said explains the drop in planned issuance.

“Still, the borrowing programme is slightly above what we
pencilled in, which is slightly negative. But it’s not something
that will push Portugal over the brink,” said David Schnautz,
debt strategist at Commerzbank in London, who had expected
issuance of up to 18 billion euros.

“What they really need to do is mobilise the investor
community to be able to sell those bonds,” he added.

Portugal has been working to diversify its investor base,
and trying to convince countries such as China, Brazil and some
Middle Eastern states to buy its debt.

Portugal’s next bond redemption is not due until April, when
it has to repay 4.5 billion euros.

The IGCP put the borrowing needs of central government, to
be met through gross issuance of bonds and net issuance of
short-term debt, at around 20 billion euros next year.

The agency said it expects to launch a new bond, with a
minimum amount of 3 billion euros on offer, via a banking
syndicate in the first quarter, while another new bond issue is
possible at a later date next year.

The IGCP also plans to tap four to six bond series in the
first quarter via auctions, with between 750 million euros and
1.25 billion euros to be offered per series.

It will also auction eight T-bill issues in the first
quarter worth a total of between 4.25 billion euros and 7.25
billion euros. The first debt auction of the year will be held
on Jan. 5, when the IGCP will offer 500 million euros in
six-month T-bills. It has yet to schedule bond auctions for the
first quarter.
(Reporting by Andrei Khalip, Editing by Catherine Evans)

UPDATE 1-Portugal 2011 bond issuance lower at 18-20 bln euro