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Paris (AFP) – Hungary, Poland, Portugal and soon Austria, members of the EU, strengthen their ties with China by issuing attractive "panda bonds" that allow Beijing to strengthen its visibility on the international financial markets.
Italy could also adhere to the trend, despite EU concerns about the possibility that China is seeking to strengthen its influence on the continent.
On 30 May, Portugal became the first country in the euro area to issue renminbi-denominated bonds, raising two billion renminbi (around 250 million euros, 280 million dollars) via a three-year a rate of 4.09%.
The offer has aroused strong demand and the Deputy Finance Minister of Portugal, Ricardo Mourinho Felix, told the ECO financial information website that the Lisbon goal was "to enter on a large market with high liquidity ".
Poland and Hungary have already issued bonds in the Chinese market, respectively in 2016 and 2017-2018, and Austria and Italy, members of the euro zone such as Portugal, have also announced their intention to do.
The cost of borrowing in the Chinese markets is however much higher than in Europe, so the reasons for such an evolution are probably elsewhere.
Portugal, which had funding problems when it was bailed out by the EU and the IMF in 2011-2014, can now offer less than 1.0% to borrow money for 10 years. years in the European markets.
But by helping China become a bigger player on the global financial scene, governments can get into the good books of Beijing and attract investment in sectors such as financial services, infrastructure and transportation.
The Portuguese port of Sines, for example, wants to attract Chinese investment as part of Beijing's global belt and road network.
"There are also important political or reputational concerns," said Liang Si, an Asian debt market expert in Asia at BNP Paribas.
"Any kind of sovereign issuing issuer of pandas bonds could be seen as a positive political move to tighten its ties with China, which is now the second largest economy in the world."
The bonds have existed since 2005, but they took off four years ago, when the Chinese central bank decided to encourage their use when Beijing launched the "Silk Road" initiative, which aims to strengthen the economic and technical influence of China.
"China is gradually trying to open its market to investors and turning its money into a reserve currency," said Frederic Rollin, investment strategy advisor at Pictet AM.
– Limited financial interest –
The total amount of "panda bonds" issued so far is $ 48 billion, compared to the overall value of China's debt market, which is close to $ 13 trillion.
"There are few foreign issuers in the yuan market," because this is "not particularly attractive," acknowledged Frederic Gabizon of HSBC, using another name for the renmimbi currency.
His London-based bank was one of those who subscribed to the Portuguese program.
Typical transactions remained modest, ranging from $ 145 to $ 434 million for short-term issues.
That said, "China's economic importance is well established and many countries therefore want to help it develop its financial markets," Gabizon said.
Faced with growing trade tensions between China and the United States, Portugal has followed Greece and several Eastern European countries by joining the "Belt and Road" project. Italy has also become the first member of the Group of Seven Group of Seven Industrialized Countries to support the project.
Rome also said it would consider issuing "panda bonds", as Austria had done in late April.
This has attracted the attention of major European nations like France and Germany.
"Since 2009/2010, China has started looking for Trojans" in Europe, said Christopher Dembik at Saxo Bank.
Beijing is targeting "countries that often have a greater need for investment and accept in return, and through an implicit agreement," to support the "panda bond" market, he added.
France and Germany, which do not hesitate to place their sovereign debt in euros, are wary of Beijing's intentions.
He is looking for the "weak underbelly for Chinese investments in Europe and the consolidation" of badets already acquired in Spain and Portugal despite the reservations issued by other EU member states, said the president. Asia Center think tank based in Paris, Jean-François Di Meglio. AFP in November.
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