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Portugal becomes first eurozone country to issue debt on China’s market

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Portugal has become the first euro-area country to tap the Chinese bond market. Lisbon announced last week its intention to sell 2 billion yuan ($289 million) worth of bonds with a maturity of three years.

The sale of the so-called ‘Panda’ bonds or yuan-denominated debt issued by a non-Chinese entity took place Wednesday and Thursday.

Portugal’s Finance Minister Mario Centeno told CNBC that the issuance is a “positive step in managing Portugal’s external debt in the medium term.” He said the sale will allow Portugal to expand its investor base.

Placing ‘Panda’ bonds is an opportunity that Lisbon could not miss, according to the head of Portugal's debt agency IGCP, Cristina Casalinho. She said earlier: “Today we crucially depend on the investor base we have and what we know is that investors that, for example, buy German debt do not invest in higher risk debt.”

She went on, saying that “It is important especially if we take a long-term perspective… China has been diagnosed as one of the countries with the highest savings in the world, and that it could be... a big operator or a big intervener in financial markets.”

Portugal which went through an international bailout between 2011 and 2014 has one of the highest levels of Chinese investments among European countries. It has reportedly been studying the issuance of ‘Panda’ bonds since 2017, but work on that accelerated after Chinese President Xi Jinping’s visit last December.

Poland became the first European country to issue government bonds on the Chinese market in 2016. Hungary followed the move two years later.