MNI: Portugal Sees Improving Foreign Demand For Bonds

Portugal plans to further diversify its investor base across geographies and investor types in 2026, the country's debt management agency (ICGP) told MNI, as foreign demand improves especially for long-dated bonds.

"Over the past year, Portugal has seen an increase in foreign investors," which has "contributed positively to secondary market activity," the agency said in emailed responses to questions, adding that this "evolution appears structural." 

The IGCP "is not considering significant changes to its issuance strategy" in 2026, it said, adding that it " will continue to privilege predictability and a regular market presence, with a focus on providing liquidity across the curve."

“The key priorities include maintaining a regular presence in the market through well-calibrated auctions and syndications, further diversifying the investor base across geographies and investor types, and ensuring smooth refinancing of upcoming redemptions.” (See MNI: Ireland Expects Issuance To Renormalise - Debt Office)

Portugal's 2026 financing programme will be published in the second half of December.

"Portugal currently stands out as one of the euro area’s best performing sovereign issuers," the IGCP said, owing to "strong fiscal discipline, solid growth, and a credible debt management strategy," reflected in "successive rating upgrades." Portugal's 2026 draft budget features a surplus of 0.1% of GDP, down from 0.3% this year.

MAJOR INDICES

"The reintroduction of PGBs in major global indices has further enhanced visibility and benchmark status among international investors," it said, noting the inclusion of the bonds in the FTSE World Bond Index.

The broadened international investor base, including "index-tracking funds as well as Germany, Austria, Switzerland, UK and Asian real money accounts," has particularly boosted demand "at the longer end of the curve."

Overall, "liquidity conditions in the Portuguese government bond market have improved notably over the past year, supported by lower bid-ask spreads and higher trading volumes," it said.

The impact of the European Central Bank's quantitative tightening programme has been "smoothly absorbed by the market," it said, as the "ICGP's predictable issuance policy, supported by robust fundamentals and ongoing rating improvements, has helped offset the withdrawal of central bank demand."

The ICGP added that it "does not expect any negative impact on credit spreads from Germany’s higher issuance." (See MNI INTERVIEW: Fiscal Concerns Overstated - Belgian Debt Chief)