Bank of China and CGD sign protocol to issue panda bonds

CGD and the Bank of China have signed a protocol this Wednesday to issue Portuguese public debt in renminbis (or Chinese yuan), also known as the Portuguese Panda Bonds. Reuters reported the news, while the Chinese President was visiting Portugal, quoting the CEO of that banking institution, Paulo Macedo.

Also, according to the news agency, Paulo Macedo said that “both banking institutions have been working on structuring the issuance of Portuguese public debt in Chinese yuan”, but outlined that the agreement foresees “no specific date” for the issuance of the Portuguese panda bonds. However, CGD’s leader said that this should happen “very soon”.

“This protocol agreement will reinforce the commitments we have, and help structure and develop what we need to organize such operation after the bonds are on the market”, Macedo told Reuters. Under the protocol “certain credit facilities will also be given to CGD in regards to Portuguese exports to China and which need extra guarantees from the Chinese market”.

In order to attract foreign investors, the Portuguese government has announced a tax break on interests from the loans conceded to non-residents who invest in panda bonds from the IGCP, applicable both to the personal income taxes and the corporate taxes. The measure is part of next year’s State Budget.