Portuguese bonds rally as DBRS reaffirms debt rating; 10-year yields near 1-1/2 month low

The Portuguese government bonds rallied Monday after rating agency DBRS reaffirmed the country’s investment grade rating on Friday, retaining bonds in ECB’s QE programme.

The yield on the benchmark 10-year bond fell 9 basis points to 3.099 percent (1-1/2 month low), the yield on 20-year note also dipped 9 basis points to 3.809 percent and the yield on short-term 3-year bond slid 5-1/2 basis points to 0.762 percent by 09:50 GMT.

The Portugal’s 10-year/Bund spread narrowed 3 basis points to 315 basis points, a one-month low and down from 36 basis points in the interim, since the DBRS rating agency reaffirmed their investment grade rating. That permits the ECB to continue including Portuguese government bonds in its QE programme.

According to Reuters, the DBRS, a credit rating agency, maintained its BBB (low) investment grade rating with a stable outlook after the close of markets on Friday, citing Portugal's adherence to the EU economic governance framework, including progress in reducing its budget deficit.

Meanwhile, Portugal's stock index PSI20 Index traded 0.70 percent higher at 4,760 by 09:50 GMT.