Portugal’s benchmark bonds were traded at negative yields, reflecting an increasingly moderate attitude of investors towards a country that was once one of the most affected by the European debt crisis.

The yield on 10-year government bonds of the southern European country would have fallen on Tuesday to a minimum of minus 0.009%.


Portugal joins other countries, including France, Germany and the Netherlands, which also have a low level of debt. This reflects the fact that demand for bonds is so high that investors holding them until maturity receive less than they originally paid. It is also another sign of a reversal of market expectations in favour of a more united European Union.

The deep financial crisis that hit Portugal at the beginning of 2010, as well as several other southern European countries, prompted the government to intervene in the banking sector. There have been disagreements between the northern and southern European countries and concerns about the fragmentation of the trading bloc, which has led to a significant increase in the cost of credit for countries considered risky and in questionable financial form, including Portugal.

The coronavirus pandemic had the opposite effect and would have brought Europe closer together, so…

Rohan Khanna,

Tariff specialist


The politicians actively support the member states, both in the Central Bank and in the European Commission, the executive arm of the trading bloc, which agreed in July on a spending package of 750 billion euros, the equivalent of 908 billion dollars, the so-called stimulus fund.

When we talk about greater synchronisation of European financial markets, the emphasis is on the stimulus fund and the speed with which European politicians have united and agreed, according to Hanna. Politics has become much more closed than in the past.

This is increasingly reflected in the pricing of European government bonds, with the difference in borrowing costs between countries narrowing as investors expect the EU to support its weaker members.

Although the Recovery Fund has met with some opposition from Hungary and Poland, which have vetoed a mechanism that links EU funding to the rule of law, investors continue to have confidence in its development.


Investors believe that the coronavirus pandemic has brought European countries, including Portugal, closer together. Parliament building in Lisbon.


Patricia de melo moreira/Agence France-Presse/Getty Images

Such delays are not unusual for Europe, he said.

Konstantin Vitus,

Pimco’s bond portfolio manager. We are convinced that the EU will find a way to maintain the Reconstruction Fund in the broadest sense of the word and avoid problems of physical implementation.

The European Central Bank is also actively supporting the economy of the region through a EUR 1.35 trillion bond purchase programme, which has significantly increased demand for public debt and reduced profitability. The board will meet on Thursday and should expand its monetary stimulus programmes, which is likely to mean more purchases of assets such as government bonds.

We have had another blockade in Europe, which is probably a double drop in economic output. The ECB needs to be even more accommodating, he said.

David Zan,

Head of Fixed Income Europe on

Franklin Templeton.

The funds it manages hold Portuguese bonds, but with a maturity of 15 years, which always have a positive return. We probably wouldn’t buy them with a negative return, Zang said.

-Pat Minchy

has contributed to this article.

Write to Anne Hirtenstein at [email protected].

Corrections and amendments
In July, the European Commission agreed to an amount of EUR 750 billion, or USD 908 billion. In an earlier version of this article, the amount of 908 million dollars was wrongly mentioned in US dollars. (Adjusted for 8 December 2020)

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