Portugal issues 380 million euros in “panda” bonds

  • ECO News
  • 22 September 2017

Portugal has been given the green light from the China central bank to issue debt in Chinese currency, in an operation assessed in 380 million euros. The issuance will be concluded by the end of 2017.

Portugal has been given the green light from the China central bank to issue debt in Chinese currency, in an operation assessed in 380 million euros, Reuters disclosed.

Reuters quotes statements from the Portuguese Finance minister Mário Centeno to the agency IFR, adding that the Portuguese Government has already hired three banks to perform the issuance: Caixa Geral de Depósitos (CGD), HSBC and the Bank of China. It will be the first issuance of a yuan debt in a Euro Area country.

The operation will be performed by means of a public offering in the interbank bond market, with the so-called “panda bonds” being issued with a five-year maturity. The operation should be concluded in the end of the year.

“We’ve been trying to extend the range of investors in our debt and [so far] we’ve been doing that with bonds placed in the retail market. China is interesting as it’s a large market”, the Finance minister told IFR.

Portugal is moving forward with this issuance after it got a rating upgrade from Standard & Poor’s last Friday, a decision which took investors by surprise.

We’ve been trying to extend the range of investors in our debt and [so far] we’ve been doing that with bonds placed in the retail market. China is interesting as it’s a large market.

Mário Centeno

Finance minister

The Portuguese Debt Management Agency (IGCP) has been planning this operation since May, after Mário Centeno’s three-day visit to China. After that, when the Portuguese PM went to Qatar, he highlighted Portugal’s intention of diversifying the geographical origin of the Portuguese creditors.

Although the Chinese bond market is assessed in 9.5 trillion dollars, very few international entities have sold “panda bonds” in the past years; Poland and South Korea sovereign are the exception.

PUB