New | EU planning to issue non-euro, even yuan bond to aid member states

The head of the euro zone’s bailout programme is planning to issue non-euro denominated bonds, including yuan bonds, for the first time, as part of a multi-decade plan to help stricken member states back on their feet.

Klaus Regling, the soft-spoken managing director of the European Stability Mechanism said he wanted to broaden the international interest in the bonds; a roll over and repayment programme scheduled to run until 2056.

“We will probably start with one (currency). It may be the (US) dollar but we will really decide the moment we will do it. And one day it will also be the RMB. I have no doubt about that,” he told the South China Morning Post last week while on a brief visit to Hong Kong and China.

The ESM and the earlier European Financial Stability Facility have paid out €246.1 billion to Ireland, Portugal, Spain, Cyprus and Greece combined since 2010, cleaning up sovereign balance sheets by offering low-interest bonds, in the process saving the five countries more than €20 billion in 2013 and 2014, according to ESM data.

Solely euro denominated and paying a coupon between 0 per cent and 3.875 per cent depending upon maturity, around 20 per cent of the ESM bonds have been sold to Asian investors, including central banks, insurance companies, hedge funds and pension funds.

(Regling would not say if the Hong Kong Monetary Authority Reserve Fund was an investor and the HKMA does not give a breakdown on its holdings.)