LISBON, Portugal — Portugal paid a higher interest rate to borrow €854 million ($1.2 billion) in a debt auction Wednesday that reflected continuing market nervousness about the eurozone's fiscal health.
Portugal had to ask for a €78 billion ($110 billion) bailout earlier this year to help pay heavy debts that have weakened its economy and alarmed investors. The rescue package from the International Monetary Fund and Portugal's European partners was meant to help end the sovereign debt crisis which, despite leaders' efforts, has endured more than a year.
To maintain a presence in the international debt market, Portugal auctioned 3-month Treasury bills.
The government debt agency said it paid a rate of 4.959 percent for the loan, up from 4.854 percent in a comparable auction three weeks ago and demonstrating that Portugal remains at the mercy of investors who have demanded unsustainable returns to lend it money.
Demand was 2.2 times the amount on offer, slightly up from the last sale. The debt agency had intended to borrow up to €1.25 billion but backed off from that plan as the interest rate ticked higher.
Joao Queiroz, head of trading at Portuguese financial group Banco Carregosa, said that though the rate was high for a short-term loan it was still lower than the 5 percent Portugal is paying on the bailout.
"This rate is bearable in the current context," Queiroz told Associated Press Television News. "The biggest pressure for our sovereign debt is on medium- and long-term loans where rates are in the double digits."
The rate on Portuguese 10-year bonds stood at 10.9 percent Wednesday. The rate for Germany, viewed as a healthy economy, was 1.9 percent.
A raft of debt-reducing austerity measures has contributed to Portugal's economic woes. The country went into a double-dip recession this year, and the economy is forecast to keep contracting through 2012.Comment on this story
The jobless rate is 12.3 percent, above the European Union average of 9.4 percent.
Rising public debt is forecast to peak at 106 percent of gross domestic product in 2013 before retreating.
Finance Minister Vitor Gaspar says he expects Portugal to be able to finance itself on markets in 2013, the last year it is scheduled to receive bailout funds and the year he predicts the country will resume economic growth.
Gaspar said in a Tuesday night television interview that 2012 will be "the turning point" in Portugal's "financial emergency."