Portuguese bond yields fell sharply as markets digested Portugal’s decision to make a “clean exit” from the bailout, and euro zone finance ministers backed the plan at a euro group meeting in Brussels.

Speaking after the meeting of the 18 finance ministers in the euro zone, euro group president Jeroen Dijsselbloem said it fully supported Portugal's decision not to request any follow-up programme.

His comments came a day after Portuguese prime minister Pedro Passos Coelho announced Portugal would exit its bailout programme without the cushion of a precautionary credit line, noting his country had built up a year's worth of financial reserves.

Portugal's imminent exit from its bailout on May 17th comes six months after the end of the Irish and Spanish bailout programmes. Greece and Cyprus are now the only euro zone states remaining in a bailout.

Earlier, European Commission president José Manuel Barroso, himself a former Portuguese prime minister, commended his country’s achievements in implementing the bailout terms. “Since Portugal joined the EU in 1986, the European Commission has always been a loyal, dedicated and constructive partner to Portugal, and remained at Portugal’s side during the implementation of the adjustment programme,” he said.

Portugal’s 10-year bond yield dropped to as low as 3.6 per cent yesterday, the lowest levels since 2006, continuing the recent bond market rally which has seen peripheral euro zone bonds strengthen significantly.

Klaus Regling, head of the euro zone's ESM fund, said it was very positive that Portugal had been able to issue in the markets at pre-crisis rates. Portugal returned to the debt markets last month, selling €750 million worth of 10-year debt.

Ireland was one of five countries whose budget deficits were discussed by ministers yesterday in the context of the commission's recent in-depth economic reviews.

Finance ministers also received an update on the Greek bailout, following last month’s agreement to unlock an €8.3 billion tranche of loans after a six- month impasse between the troika and Greek government over the terms of the bailout.

“It is of utmost importance to carry the current positive momentum forward in line with the memorandum of understanding,” Mr Dijsselbloem said last night.