Europe bailout fund chief sees no quick China deal

Beijing: The head of Europe’s bailout fund said on Friday he does not expect to reach a conclusive deal with Chinese leaders during a visit to Beijing but expects the surplus-rich country will continue to buy bonds issued by the fund.

Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), also said the bailout deal with Greece was an exceptional case and he saw no need to repeat it for other nations.

“We all know China has a particular need to invest surpluses,” he said at a news conference, adding that China has been a regular buyer of bonds issued by EFSE, which is developing new instruments to attract investors.

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[caption id=“attachment_118076” align=“alignleft” width=“380” caption=“China is buying several million worth of bonds issued by the EFSF.”]  [/caption]

Regling was in Beijing a day after euro zone leaders struck a last-minute deal to contain the bloc’s debt crisis.

European leaders are now under pressure to finalise the details of their plan to slash Greece’s debt burden and strengthen their rescue fund.

He was due to meet officials from China’s central bank and finance ministry on Friday.

Regling said he wanted to hear how the fund could structure investments to attract funds.

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The EFSF, set up last year and so far used to bail out Portugal and Ireland, is a 440 billion fund based on guarantees from all euro zone member states, raising capital on international markets by selling bonds.

Investors want to know how the 440 billion EFSF rescue fund will be leverage to 1 trillion to put a safety net under bigger euro zone states, such as Spain and Italy and prevent them from being swept up by the crisis.

European officials have said the EFSF will be “leveraged” up to size, either by offering insurance to buyers of euro zone debt in the primary market, or via a new special purpose investment vehicle that it hopes would draw funds from China and Brazil, among other countries.

Beijing has not said publicly it would invest in the fund, although it has repeatedly expressed confidence that Europe can overcome its two-year-old debt crisis.

China is already buying several hundred million worth of bonds issued by the EFSF, which is rated triple-A.

It also owns an estimated $800 billion worth of euro assets in its $3.2 trillion foreign exchange reserves.

Reuters