Greece is wooing China to buy up to €25bn of government bonds, a move that underlines Beijing’s growing financial power, as Athens struggles to fund soaring public debt .
Goldman Sachs, the US investment bank, has been promoting a Greek bond sale to Beijing and the State Administration of Foreign Exchange (Safe), which manages China’s $2,400bn foreign exchange reserves, said people familiar with the issue.
Gary Cohn, Goldman Sachs chief operating officer, has made two trips to Athens – last November and this month – to meet George Papandreou, prime minister and senior officials.
Beijing has not agreed to such a purchase. Meanwhile, Athens has rejected a suggestion that a Chinese bank should acquire a strategic stake in National Bank of Greece, the country’s flagship commercial lender, according to officials contacted by the FT.
But a more modest deal of about €5bn-€10bn ($7bn-$14bn) appeared possible after Mr Cohn’s second trip to Athens, officials said on Tuesday.
George Papaconstantinou, finance minister, told the FT he would visit China on a road show next month, but “no target is set” for a debt placement.
China’s foreign exchange reserves grew $130bn in the last quarter of 2009 alone. But people close to Safe said China already held a “significant amount” of Greek debt and was wary of adding to that.
A senior Greek finance ministry official said Athens would welcome Chinese buyers of its bonds. The official declined to specify an amount, though a figure of €20bn-€25bn was raised in talks with Goldman Sachs.
A €5bn syndicated loan issue by Greece this week attracted bids worth more than €20bn, but Greece continues to face pressure in financial markets.
Goldman Sachs mooted the sale of equity in NBG to Bank of China, the country’s third-largest commercial lender by assets, and made a similar proposal to China Investment Corp, China’s sovereign wealth fund, according to officials.
Chinese officials said CIC was not interested and that regulators would not let BoC make such a risky investment. Goldman Sachs and CIC declined to comment. A Bank of China spokesman said: “I haven’t heard anything about it.”
