Portugal is the first Eurozone country to issue bonds denominated in Chinese yuan after offering on 29-30 May so-called “Panda Bonds” worth €260 billion, with a three-year maturity.
The yuan-denominated bonds are the first in the European Union. Poland issued government bonds on the Chinese market in 2016, followed by Hungary in 2018. Although Portugal will pay more in higher-yielding yuan-denominated bonds, the Socialist government in Lisbon plans to enter the high-liquidity market.
Portugal went through an international bailout between 2011 and 2014 but has since returned to positive growth figures, which led ratings agency Fitch update its outlook for Portugal from “stable” to “positive.”
Since exiting its bailout phase five years ago, Portugal has had one of the fastest growing and most robust economies in the Eurozone at a time when EU stalwarts Italy and Germany have seen their economies struggle, with the former having been mired in a recession for much of the latter part of 2018 and early 2019.