Portugal pays 4.09% coupon on the first issue of Euro Zone debt in China

31 May 2019

Portugal will pay a coupon rate of 4.09% for placing debt in the Chinese market through a three-year issue of 2 billion yuan (about €260 million), according to the Portuguese Treasury Management and Public Debt Agency.

The main aim of this issue, in which demand was three times higher than supply, was to broaden the base of investors interested in taking on Portuguese public debt.

The Secretary of State for Finance, Ricardo Mourinho Félix, recently acknowledged that the interest rate to be paid on this issue of “panda bonds” would probably be higher than that currently paid by Portugal to finance itself.

Portugal is paying historically low amounts to issue public debt (the 10-year benchmark rate is currently at 1.033%), and the Secretary of State said that the higher rate “will be the cost of entering a new market.”

With this issue, Portugal becomes the first Eurozone country to issue bonds in Chinese currency, with Austria and Poland also intending to issue “panda bonds” before the end of the year.

The Bank of China and HSBC were involved as leaders, with CaixaBI, of the Portuguese state-owned Caixa Geral de Depósitos group, playing the role of financial adviser. (Macauhub)