The long-awaited ultra-long-term special government bonds have ushered in a new trend.
On May 13, the Ministry of Finance issued the Notice on Announcing the Relevant Arrangements for the Issuance of General Treasury Bonds and Ultra-long-term Special Treasury Bonds in 2024, clarifying the arrangements for the issuance of ultra-long-term special treasury bonds in 2024.
This year's issuance of ultra-long-term special treasury bonds is divided into 20-year, 30-year, and 50-year varieties, and the interest payment method is to pay interest on a semi-annual basis. On May 17, the Ministry of Finance will issue the first 30-year ultra-long-term special treasury bond this year.
What are ultra-long-term special government bonds?
This year's "Government Work Report" pointed out that in order to systematically solve the problem of funds for the construction of some major projects in the process of building a strong country and national rejuvenation, it is planned to issue ultra-long-term special treasury bonds for several consecutive years starting this year, which will be specially used for the implementation of major national strategies and security capacity building in key areas, and 1 trillion yuan will be issued this year.
Judging from the term of issuance, the current maturity of the mainland's long-term treasury bonds is generally 10 years or more, and the maximum maturity of the ultra-long-term special treasury bonds issued this year is 50 years.
From the perspective of major investment directions, the ultra-long-term special treasury bonds will focus on major issues in the process of building a strong country and national rejuvenation, and will focus on supporting the construction of scientific and technological innovation, urban-rural integrated development, regional coordinated development, food and energy security, and high-quality population development.
Historically, the mainland has issued three new special treasury bonds in 1998, 2007 and 2020. Luo Zhiheng, chief economist of Guangdong Kai Securities, told the Financial Times that in order to deal with emergencies, in addition to adjusting the budget and issuing additional treasury bonds, the mainland has issued three new special treasury bonds. Among them, in 1998, it was used to replenish the capital of the four major commercial banks; In 2007, it was used to incorporation and establishment of CIC to manage foreign exchange, which matured in 2017 and 2022, so it issued special treasury bonds to renew them. In 2020, special anti-epidemic government bonds were issued.
"Strictly speaking, only the 30-year special treasury bonds issued in 1998 and the 15-year special treasury bonds issued in 2007 can be classified as ultra-long-term special treasury bonds, and these two issuances are also in line with the purpose of 'implementing major national strategies'." Lian Ping, president and chief economist of Guangkai Chief Industry Research Institute, said that the ultra-long-term special treasury bonds issued this year will focus on the implementation of major national strategies and security capacity building in key areas, which is closely related to the transformation and upgrading of the mainland economy and high-quality development in the next few decades, and will play a vital role in promoting the goal of socialist modernization.
In addition to the maturity and investment direction, special government bonds are also significantly different from ordinary government bonds in terms of budget management. It is understood that the 1 trillion yuan ultra-long-term special treasury bonds to be issued will be included in the budget of the central government fund and will not be included in the deficit. In terms of expenditure allocation, the central government will temporarily allocate 500 billion yuan for expenditure at the same level and 500 billion yuan for local transfer payments, and will be adjusted in the future according to the specific distribution situation.
What is the significance of issuing ultra-long-term special government bonds?
The meeting of the Political Bureau of the CPC Central Committee held at the end of April made it clear that it is necessary to issue and make good use of ultra-long-term special treasury bonds as soon as possible and speed up the issuance and use of special bonds. How will the issuance of ultra-long-term special treasury bonds affect the operation of the economy at the current point in time?
Luo Zhiheng said that the issuance of ultra-long-term special treasury bonds is conducive to expanding aggregate demand, optimizing the supply structure, improving the efficiency of economic operation, and increasing the potential growth rate of China's economy. At the same time, the issuance of ultra-long-term treasury bonds optimizes the debt structure and reduces debt risks. Compared with local governments, the central government's bond issuance has a lower cost and longer cycle, and ultra-long-term special treasury bonds have formed high-quality assets, and more importantly, it has avoided the risks caused by local government leverage, making room for local finances.
Ming Ming, chief economist of CITIC Securities, told the Financial Times that the current funding rate is stable around the policy interest rate, and the interbank certificate of deposit interest rate is basically maintained at a low level during the year. From the perspective of broad liquidity, government bond issuance can effectively expand government financing to drive the improvement of total social financing, thereby boosting economic growth.
In addition, the Ministry of Finance said that it will coordinate the issuance of general treasury bonds and special treasury bonds, rationally arrange the pace of issuance, and effectively guarantee the capital needs of special treasury bond projects. Strengthen the overall planning of central and local funds, stock and incremental funds, and form a synergy with ultra-long-term special treasury bond funds to improve the overall efficiency of funds.
In addition, the Ministry of Finance will also study the establishment of a supervision mechanism in light of the actual situation of ultra-long-term special treasury bond funds, strengthen supervision over the whole process of fund allocation, issuance, and use, and ensure standardized, safe, and efficient use.
Source: Financial Times client
Reporter: Xu Beibei
Editor: Duan Jiaxi
Email: [email protected]