Portugal becomes first Eurozone country to issue debt in Chinese currency

Portugal is (finally) becoming the first Eurozone country to issue sovereign debt in the fast-growing Chinese ‘panda bond’ market.

On May 29 and 30 the country plans to raise a loan of two billion (Chinese renimbi) – equivalent to €260 million – payable by the State over three years.

Suggests Reuters, if all goes ‘as planned’, the move will “open the way for other European governments”.

Secretary of state for finances Ricardo Mourinho Félix has told ECO online that the objective is to “enter markets of large dimension, with a lot of liquidity and elevated savings”.

Portugal however is not the first European government to issue bonds in the panda bond market: Poland, Hungary and the Canadian province of British Columbia have already done so, and Italy is said to be considering it.

Portugal first revealed its plans to issue debt in China’s interbank bond market last September.

It comes in the wider context of the European Central Bank announcement that it was throttling back on quantitative easing (meaning countries will have to look elsewhere to find new sources of liquidity).

Said the SoutheuSummit website when all this started kicking off last summer: the panda bond market will “allow Portugal to diversify its debt holders, making it more resilient to any financial shocks that might occur closer to home”.

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