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China to buy Europe bailout bonds-FT
May 26, 2011 / 1:57 AM / in 6 years

China to buy Europe bailout bonds-FT

SINGAPORE, May 26 (Reuters) - China and other Asian investors are expected to buy a “strong proportion” of Portuguese bailout bonds when the eurozone’s rescue fund starts auctioning them next month, the Financial Times reported on Thursday, citing senior fund officials.

The report helped boost the euro in Asian trade, with the single currency trading up to $1.4150. It had firmed earlier on a strong opening for Asian equities, despite worries that Greece may be on the verge of defaulting on its debt. [ID:nL3E7GQ033]

Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), told reporters on Wednesday that Beijing was “clearly interested” in the Portuguese auctions, the FT reported.

He said strong interest from investors in Asia and elsewhere showed renewed confidence in the euro as a currency, the newspaper said.

But he acknowledged that the primary motivation of Asian investors was to find new investments, rather than any endorsement of how Europe has handled the debt crisis in some eurozone countries.

“(Asia) is a region that has money to invest in the rest of the world,” Regling was quoted as saying.

“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.”

Christophe Frankel, EFSF chief financial officer, confirmed China had participated in its January auction, which raised cash for Ireland’s bailout, but declined to say how much Beijing had invested, the FT reported.

The fund will hold its first auction to raise funds for the recently approved 78 billion euro Portuguese bailout in mid-June. The 3 billion to 5 billion euro offering will auction the fund’s first 10-year bonds. (Reporting by Kim Coghill; Editing by Anshuman Daga)

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