Portugal has successfully raised about 1bn euros ($1.4bn; £873m) but is paying a much higher interest rate to lenders.The government was forced to tap the financial markets to raise money to repay loans falling due next week.But Lisbon is paying yields of 5.1% and 5.9% to borrow money for six and 12 months, against the 3% and 4% it was paying to borrow last month.Analysts said paying such high rates was unsustainable for an economy that is seeing virtually no growth.The business editor, Robert Peston, said the rate is more than Ireland was paying before it received bail-out funds and "implies Portugal will have to go for a rescue after its general election" in June.The markets will also be watching closely to see which institutions subscribed to the bond auction.There has been speculation that some of Portugal's own banks were refusing to take part unless Lisbon applied for a bridging loan from the eurozone's emergency bail-out fund.The government insists it does not need a bail-out.The jump in yields was sparked by ratings agency Moody's downgrading Portuguese government debt by one notch, to Baa1 from A3.The rating is still investment grade - but only just.
It is the second downgrade by Moody's in less than a month and follows fellow agency Standard & Poor's cut last week.
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