Portugal's borrowing cost rose sharply, but less than expected, in a bond auction today from a previous sale in July 2010, with the hefty amount sold signalling the country should be able to repay its maturing debt this month.

Portuguese bonds yields have spiked to euro lifetime highs this week, pushed by a government collapse that has led to downgrades by credit rating agencies and mounting pressure for the debt-laden country to ask for an international bailout.

The IGCP debt agency sold €1.645 billion in June 2012 bonds, higher than the initially indicated offer of €1.5 billion, with demand outstripping supply by 1.4 times.

The average yield on the June 2012 bond rose to 5.793 per cent from 3.159 per cent in the sale in July. The same maturity yielded over 7 per cent bid in the secondary market earlier today.

Reuters