Portugal hires banks for debut Panda bond

Source:Reuters-Global Times Published: 2017/9/21 17:38:40

Bank of China, Caixa Geral de Depositos & HSBC working on deal

Portugal has appointed banks for the issue of a benchmark-sized Panda bond, said Mario Centeno, the country's finance minister.

The sovereign is looking at a maturity of up to five years

The bond will be issued through a public offering in the interbank bond market, with the maximum amount on the first drawdown likely being 3 billion yuan ($455 million).

Bank of China, Caixa Geral de Depositos, and HSBC are the banks working on the deal, which is planned for conclusion by the end of the year. The People's Bank China, China's central bank, has authorized the transaction.

If the Panda bond goes through, Portugal will become the first eurozone country to borrow in the $9.5 trillion Chinese bond market, potentially opening the way for other European governments.

China is the world's third-biggest debt market and might appeal to other eurozone states.

"We've been trying to extend the range of investors in our debt and we've been doing that with bonds placed in the retail market. China is interesting as it's a large market," said Centeno.

Just a handful of foreign entities - including sovereigns Poland and South Korea - have sold Panda bonds in recent years, although offshore, yuan-denominated "dim sum" market is well established.

Panda bond issuance increased ninefold last year to 130 billion yuan, and is expected to grow by another 50 percent in 2017, according to JPMorgan.

Portugal should be able to reach a broader base of investors following its recent upgrade to investment grade by S&P on Friday.

The decision surprised markets, which had expected a move in outlook to positive, according to several bankers.

The rating agency factored in improvements in its still-troubled banking sector and progress in the reduction of its budget deficit.

Posted in: MARKETS

blog comments powered by Disqus