Tags: Chinese | china | buy | portuguese | Bail-Out | Bonds | portugal

Chinese Seen Snagging Portuguese Bail-Out Bonds

By Dan Weil   |   Thursday, 26 May 2011 01:07 PM

The bonds that the euro zone rescue fund will start issuing next month to bail out Portugal should see demand from a surprise investor. That’s China, senior fund officials say, according to The Financial Times.

Asian investors, including the Chinese government, will likely account for a “strong proportion” of the bond buyers, the officials say.

China is “clearly interested” Klaus Regling, chief executive of the European Financial Stability Facility, told reporters.

Actually, China’s participation wouldn’t be a complete surprise given its desire to diversify from U.S. investments. And the government is apparently willing to take on more investment risk, as yields on safe investments, such as U.S. Treasury securities, stand near historic lows.

“(Asia) is a region that has money to invest in the rest of the world,” Regling says. “They don’t want to go only into one currency. They don’t want to go only into one asset class. . . . They look at us and come to the conclusion it’s a good way to diversify.”

The strong desire for the bonds from Asian and other international investors also indicates their confidence in the euro, despite the continent’s debt crisis, he argues.

Currency traders told Reuters that the talk of China’s demand for the Portugal bonds already has helped buoy the euro, which has plummeted 5 percent in May after a strong four-month rally.

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The bonds that the euro zone rescue fund will start issuing next month to bail out Portugal should see demand from a surprise investor. That s China, senior fund officials say, according to The Financial Times. Asian investors, including the Chinese government, will...
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