Portugal’s sale of sovereign debt on Chinese bond market “a success”, says banking boss

Governor of the Bank of Portugal Carlos Costa has dubbed the first emission of sovereign debt on the Chinese (Panda) bond market “a success”.

Talking to journalists in Macau, Costa said all concerned were to be congratulated: “The Portuguese treasury for launching the operation, the renmimbi (Chinese currency) and market for accepting it”.

Said the FT yesterday, Portugal has raised the two billion renmimbi (€260 million) that it wanted (click here), repayable at 4.09% in three years.

IGCP, Portugal’s public debt agency said in a statement that “with this successful transaction, Portugal has accessed the third largest bond market in the world to further diversify its investor base”.

The offer was targeted mainly at Chinese institutional investors.

It was the first issue of so-called Panda bonds by a eurozone sovereign state, and only the third by an EU country after Poland and Hungary issued renminbi-denominated debt in 2016 and 2018 respectively.

Orders for the bonds came in at over three times the amount on offer which is why the interest has been pegged lower than originally expected, said Carlos Costa.

Coincidentally – or perhaps not – the secretary general of the association of Portuguese banks was also in Macau this week, telling journalists how China may be able to “help overcome the lack of capital in Portugal”.

Norberto Rosa told Lusa and Jornal Económico that China in the past has made investments in Portugal, but now it is “fundamental” that it starts putting money into new industries and sectors.

“There (in China) there is an excess of capital and we (Portugal) don’t have enough of it”, he explained. “I think there could be a good symbiosis between the Portuguese economy and the Chinese economy”.

Rosa was in Macau for the signing of a cooperation deal between Portuguese banks and those in the former colony that is now an autonomous region on China’s south coast.

Said reports, the deal was signed by the association of Macau banks, in collaboration with the banking associations of Portugal, Mozambique, São Tomé and Guinea Bissau.

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