Thank you!!! Just what I was looking for!!
I meant the average of the *stock* of Portugal's debt.Best,P
This comment has been removed by the author.
Portuguese Public Debt - Principal+Interest
@Pedro LainsPedro this is the ratio of interest payments over total outstanding debt. It is the :average" stock of debt.
Thanks. 3.5% in 2009. 4% in 2010?
How can Portugal "Debt average interest rates" situation be a problem with this numbers. I don't really get it. Can you explain it to me in simple terms?
Hugo Lourenço, I don’t know the data with detail so my answer is surely speculative.A few years ago it was common for Portugal to issue debt with fixed coupon rate, but then, through swap operations, convert it into variable coupon rates, that would change with the market. Thanks to these swap operations, Portugal would be benefit from possible decreases in the interest rates (and remember that interest rates are at historically low levels, right now).Because most of those swap operations were performed when our risk premium was close to zero, this implies that, even if we are paying more and more for the debt that we are currently issuing, we are still taking advantage of the lower and lower interest rates that apply to the old debt. Moreover, a big chunk of our debt, like the famous “Certificados de Aforro”, is indexed to the Euribor rates, which are at historically low levels. All this explains why, on average, we are not paying too much interest. But this does not change the fact that each time we issue new debt we have been paying higher and higher interest rates. If we keep revolving the old debt, issued at low interest rates, by the new one at the current interest rates it is quite obvious what will eventually happen.