Day of Triffin

27 January 2010 By John Foley Follow @johnsfoley

With $2.4 trillion in foreign reserves, China could easily afford to bail out the troubled EU state. High bond yields and influence over Greek shipping may appeal and Greece only needs $40 bln or so this year. If only all of China’s currency kitty could be housed so easily.

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Goldman Sachs held preliminary talks over a Chinese state investment in Greek sovereign debt, according to a person familiar with the situation. Talks were at an early stage, and no proposal had been presented to the Greek government.

Greece sold 25 billion euros in fiveyear bonds through a public auction on Monday, with a yield of 6.2 percent around twice the yield on regular euro bonds, and a 0.3 percentage point premium on other Greek debt of a similar maturity.

The EU country's credit rating was cut in December by Standard & Poor's and Moody's over concerns about a fiscal deficit of some 13 percent of GDP. Greece aims to bring this ratio down to 3 percent by 2012, and requires around 50 billion euros of funding in 2010.

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