主题：China jumped in to rescue Sp -- parishg

Spain. From FT. so funny...

(it might forget who burned their exported shoes to Spain)

China offers Spain 1bn confidence vote

By David Oakley and Anousha Sakoui in London

Published: July 12 2010 21:32 | Last updated: July 12 2010 21:32

China, the world’s largest foreign exchange holder, bought several hundred million euros of Spanish bonds last week as Asian investors returned to the eurozone peripheral market after a two-month hiatus.

China’s State Administration of Foreign Exchange, or Safe, which manages the reserves under the country’s central bank, was allocated up to 400m ($505m) of Spanish 10-year bonds in a debt deal last Tuesday, according to people familiar with the situation.

Safe had put in an order for about 1bn after demand rose to 14.5bn in a matter of a few hours last Tuesday. Mike Amey, portfolio manager at Pimco, said: “The fact big Asian investors are back in the market is a big vote of confidence for the eurozone. There was strong demand for the Spanish bond. It really helped sentiment.”

A banker added: “Safe is an important investor and this transaction was the right trade at the right prices. It is a vote of support – it is not China bailing out Spain but without doubt, the Chinese involvement was helpful.”

The Spanish deal buoyed the broader markets, helping last week’s global equity rally and marking a potential turning point for the eurozone.

Of the 6bn raised, two-thirds were bought by international investors, of which 14 per cent was purchased by Asians. Safe bought about half of the Asian allocation. In a similar 10-year deal in January, Spain sold just 5 per cent to Asian investors.

Bankers say Asian investors have bought very few eurozone bonds from southern periphery countries in the past two months amid fears the eurozone crisis could force the break-up of the single currency. Safe declined to comment.

Separately, Greece dropped plans to refinance 12-month government debt because of fears investors would demand exceptionally high yields.

The Greeks will instead only auction six-month treasury bills in the country’s first attempt to raise funds on the capital markets since agreeing a 110bn bail-out package in April.