Portugal Raise $1.6 Billion in Bond Auction

Debt-strapped Portugal has sold nearly $1.63 billion of government bonds at reduced rates. The bond auction was closely watched in Europe, after reported pressure on Lisbon to accept a bailout.

After months of bleak financial news, Lisbon finally got a reprieve on Wednesday, raising nearly $1.63 billion in a bond auction. Yields on its bonds that mature in 2020 fell from a similar sale in November, although those for shorter-term bonds rose sharply.

The bond sale was considered a key test for Portugal, the latest member of the eurozone block struggling under a mountain of public debt. Financial markets have been demanding high rates for bonds sold by struggling countries.

Greece and Ireland, two other members of the 17-member group sharing the euro currency, have already accepted bailouts from the European Union and the International Monetary Fund. According to media reports, France and Germany have pressured Portugal to follow suit. While Portugal's prime minister said no bailout was needed, such remarks have been made before – by Ireland, before it agreed to a bailout.

French Finance Minister Christine Lagarde did not speak about a bailout during a television interview Wednesday morning. She spoke before the results of Portugal's bond sale were announced.

Lagarde noted that Portugal had so far produced economic results better than it promised when it launched austerity measures last year. She said she hoped the trend would continue – and that investors would understand.

The eurozone's financial problems have been a major worry for the 27-member European Union for months. The financial difficulties of Spain and Italy are also being closely watched. Both countries are holding their own debt auctions on Thursday.