Ailing Portugal raises $2.6B in debt auction

Euro notes, currency, money, eurozone
AP

(CBS/AP) LISBON, Portugal - Portugal has managed to borrow almost euro 2 billion ($2.65 billion) at sharply lower prices in a short-term debt auction, despite nagging concerns about its chances of beating a recession.

The government debt agency said it sold 12-month Treasury bills at an interest rate of 3.6 percent and 4-month bills for 2.16 percent amid strong demand.

Austerity measures attached to last year's euro 78 billion bailout have brought a sharp economic downturn, with the government predicting a 3.3 percent contraction this year.

Investor PIMCO: Portugal risks becoming 2nd Greece
EU must now figure out how to rescue Spain and Portugal

Portugal needs to generate growth to pay off its debts, and any sign that it may need more aid would trigger a new bout of worries about the 17-nation eurozone's financial health.