Portugal retruned to the debt markets successfully today, easily selling €750 million of 10-year debt in its first bond auction in three year.

The sale is a show of support from investors that puts the country on track to exit its bailout smoothly next month.

The IGCP debt agency placed the bond at an average yield of 3.5752 per cent, the lowest on record in an auction of that maturity.

Today’s figure was significantly lower than the secondary market yield of 3.68 per cent registered just before the auction and well below the 5.112 per cent that Portugal paid in a syndicated 10-year bond sale in February. Demand outstripped the amount placed by 3.5 times.

"It's now proven that Portugal can finance itself in the tough and rough normal market without support from banks," said Filipe Silva, head of debt at Banco Carregosa in Porto.

“The yield below the secondary market is very important as it shows that investors do not demand a premium for holding Portuguese debt.”

The debt sale, intended to help pre-fund Portugal for 2015, occurred a day after its international lenders started their final evaluation of its performance under the €78 billion bailout it took in 2011.

It suggests that Portugal, whose benchmark yields are trading at eight-year lows, has an increasingly good chance of making a clean exit from the rescue package.

That means it would follow in the footsteps of Ireland, which chose not to request a precautionary European loan when its bailout ended in December.

"The result means that Portugal will probably be able to go it alone, which is nothing short of shocking considering where Portugal was just 10 month ago," said Nicholas Spiro, managing director at Spiro Sovereign Strategy consultants in London.

Ireland sold 10-year debt at 2.967 per cent in its first regular post-bailout bond auction last month.

Portuguese debt yields in the secondary market are close to where Irish yields were about a month before the end of the bailout.

(Reuters)