UPDATE 1-Yields jump again at Portugal debt tender

* Demand higher at 2.5 times, but yields spike

* Analysts say pressure for bailout growing

(Recasts with analysts)

LISBON, Dec 1 (BestGrowthStock) – Borrowing costs spiked in
Portugal’s 12-month treasury bill auction on Wednesday,
reflecting a rise in market pressure for the country to follow
Ireland and Greece and seek an international bailout.

The country sold all the 500 million euros ($651.4 million)
in 12-month treasury bills on offer to decent demand, but it had
to pay 5.281 percent, up from 4.813 percent two weeks ago.

That was higher than the roughly 5 percent that dealers and
analysts had looked for ahead of the sale, though the rise in
short-term borrowing costs was much smaller than a more than
150-basis point jump at the previous tender in November.

“There is no place to hide on the curve for Portugal
anymore. Once again, the auction increases pressure to find a
circuit-breaker to limit the damage, which is most likely to
mean asking for aid,” said David Schnautz, debt strategist at
Commerzbank in London.

Filipe Silva, debt manager at Banco Carregosa, said the
increase in demand, to 2.5 times the offer from 1.8 times in the
previous auction reflected the country’s readiness to pay more
to place its debt in the penultimate auction of the year.

“This rate is very high and Portugal cannot keep raising its
rates at this pace, 47 basis points in just two weeks,” he said.

The premium investors demand to hold benchmark 10-year
Portuguese bonds rather than German Bunds fell to 427 basis
points on Wednesday from Tuesday’s 450 amid market talk that the
European Central Bank will announce a programme to buy the bonds
of troubled peripheral issuers.

“There is no relief in the short term for Portugal. Spreads
are lower today in a general de-escalation, but it doesn’t seem
like we are going to see the end of uncertainty or any major
relief,” Schnautz said.

Following are the deatils of the auction:

Auction date: 01/12/10 17/11/10
Maturity 18/11/11 18/11/11
Settlement date: 03/12/10 19/11/10
Avg. yield (pct) 5.281 4.813
Avg. price (pct) 95.116 95.359
Highest yield (pct) 5.400 4.950
Lowest yield (pct) 5.000 4.440
Tail 0.119 0.137
Total bids 1.253 bln 1.334 bln
Allotment 500 mln 750 mln
Bid-to-cover ratio 2.5 1.8
Outstanding after auction 1.366 bln 866 mln

For more information about the auction please click on
(IGCP15: ).
(Reporting by Axel Bugge and Andrei Khalip; editing by Patrick

UPDATE 1-Yields jump again at Portugal debt tender