Portugal held a sale of its 10-year bonds today for the first time since it needed a bailout in 2011.
The sale represents a milestone in its efforts to regain investor confidence and prove its contested austerity policies are paying off.
Portugal had not sold long-term debt since it needed a €78 billion rescue two years ago.
The three major international ratings agencies downgraded Portugal's credit worthiness to junk status as the debt-heavy country fell victim to the euro zone financial crisis that unnerved investors.
Growing concerns that Portugal had too much debt and too little growth made markets uneasy about lending it money.
That sent the interest rate, or yield, that the country pays on its 10-year bonds above 7% - a rate that made selling debt unaffordable and which compelled Portugal to ask for help from the International Monetary Fund and its European partners.
The Portuguese Treasury said it sold the bonds at a rate of 5.669%.
Foreign investors bought 86% of the bonds, and demand was so strong that Portugal could have sold 10 billion euros' worth, Treasury Secretary Maria Luis Albuquerque said.
As the euro zone tries to reduce its debt load, Portugal has been at the heart of the debate about the merits of the austerity policies demanded by the bailout creditors in return for their loan.
Many Portuguese and international economic experts blame the last two years of pay cuts and tax hikes for the record jobless rate of 17.5%. The government forecasts a third year of recession in a row in 2013. But Foreign Minister Paulo Portas told a business meeting in Lisbon the bond sale was evidence the government's economic reforms are working.
Yields on Portuguese 10-year bonds have recently fallen to around 5.5%. Last year, the yields were in double digits.
Finance Minister Vitor Gaspar said early indications were that the interest rate in the sale would be below 5.7%. Market demand was for more than €9 billion - three times more than the government targeted - by mid-morning.
The sale was also good news for the bailout lenders, whose inspectors returned to Lisbon today to assess the country's compliance with the three-year recovery programme that is supposed to restore Portugal's fiscal health.
Portugal is keen to show it is more like Ireland, which has abided by its austerity programme, than Greece which needed a second bailout and where street protests have turned violence. European leaders are also keen to avoid a repeat of Greece's record.
The coalition government, though, has had a hard time persuading the Portuguese their sacrifices are worthwhile. Prime Minister Pedro Passos Coelho last week announced plans to cut another €4.8 billion over the next three years. Government workers, pensioners and public services will bear the brunt of those unpopular cuts.
But Passos Coelho said government spending must be reduced or the rescue funds, which are disbursed in installments, will not be released by the bailout lenders.
The finance ministry was expected to announce the full results of the bond sale later today.
