October 14, 2019 / 3:23 PM / a month ago

Investors seem relaxed about Portuguese politics, debt agency head says

LISBON, Oct 14 (Reuters) - International investors do not seem worried about political uncertainty in Portugal after the Oct. 6 election, as indicated by Portuguese yields remaining below their Spanish equivalents, the head of the state debt agency IGCP said on Monday.

“The configuration of the election result does not seem to have caused concern,” IGCP’s president, Cristina Casalinho, told Portugal’s public broadcaster RTP as negotiations between Portugal’s caretaker Prime Minister Antonio Costa and party leaders rumble on.

She added that Spain’s upcoming election had led to a “relative inversion in terms of the risk premium of the two countries”.

Portugal’s Socialists won the election on Oct. 6 with 36.5% of the vote but did not reach an outright majority. Negotiations between Costa and party leaders are ongoing but he is unlikely to sign a written deal with far-left parties as happened in the previous administration.

Analysts say the lack of a written deal could be risky but could also give the Socialists opportunities to work more closely with the centre-right PSD.

Portuguese 10-year bond yields fell three percentage points to 0.17% on Monday, five percentage points below Spain’s 0.22% yield, nearing historic lows.

Portugal has maintained lower yields than Spain since the general election. Spain faces another national election on Nov. 10. (Reporting by Sergio Goncalves, Writing by Victoria Waldersee, Editing by Catarina Demony and Mark Potter)

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