Thursday 13 January 2011

Interpreting the news...

We are told that Portugal placed 599 million at 6.716% for 10 years while the previous auction commanded a rate of 6.8086%. The result is that Portugal has avoided spending 10 million in interest payments (relative to the last auction results).

We are also told that Portugal placed 650 million at 5.396% for 4 years while the previous auction commanded a rate of 4.041%. The result is that Portugal will pay an extra 40 million in interest payments.

I thought interest payments matter for assessing the debt sustainability but of course I am open to other interpretations.

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