China to buy more Spanish bonds

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China to buy more Spanish bonds

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China has said it will keep buying Spanish government bonds and will help fund a restructuring of Spain’s savings bank.

China’s Premier Wen Jiabao made that pledge after a meeting with Spain’s Prime Minister Jose Luis Rodriguez Zapatero in Beijing.

Spanish officials say China has completed the purchase of six billion euros of Spanish public debt reportedly pledged in January.

That helps Madrid squash an idea that it might need a bailout.

Spain’s borrowing costs have soared since early last year on investor worries that it might need help from the EU and the IMF like other euro zone periphery countries.

The government has also struggled to find investors for the savings banks, which are riddled with bad debts.

While Zapatero was in Asia, a Spanish government source said China’s sovereign wealth fund and private investors are studying investments of $13 billion in Spain’s banks.

Zapatero is on a three-day visit to China and Singapore. In Beijing he said: “China has shown itself to be a very good friend to Spain as we’ve confronted the difficulties of the financial crisis, which fortunately are being solved.”

He is meeting with bankers and fund managers in Singapore to show them data on Spain’s economy and finances to argue the case for them investing in Spain.