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Goldman Sachs trying to broker Greek bonds to China

Section: Daily Dispatches

The investment house gets a cut even when money is flushed down the toilet.

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Athens Invites Beijing to Buy Bonds

By Kerin Hope and Jamil Anderlini
Financial Times, London
Wednesday, January 26, 2010

Greece is wooing China to buy up to E25 billion 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 $2,400 billion 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 Financial Times.

But a more modest deal of about E5 billion-E10 billion ($7 billion-$14 billion) 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 $130 billion 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 E20 billion-E25 billion was raised in talks with Goldman Sachs.

A E5 billion syndicated loan issue by Greece this week attracted bids worth more than E20 billion, 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."

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