Ultra-long-term special treasury bonds "opened" this Friday: the first phase of bidding is 40 billion yuan, with a term of 30 years

National Business Daily

2024-05-14 06:23Published on the official account of Sichuan Daily Economic News

Every reporter: Li Yuwen Song Qinzhang Every editor: Liao Dan

The much-watched issuance of trillions of ultra-long-term special treasury bonds has been put on the agenda.

The General Office of the Ministry of Finance issued a notice on May 13, clarifying the relevant arrangements for the issuance of ultra-long-term special treasury bonds in 2024. According to the arrangement, the maturity of ultra-long-term special treasury bonds to be issued this year is 20 years, 30 years, and 50 years respectively, and interest will be paid on a semi-annual basis.

According to the official website of the Ministry of Finance, on May 17 (that is, this Friday), the tender for the issuance of 40 billion yuan of 30-year special treasury bonds, the first issue of this year. Interest will be accrued on this treasury bond from May 20, 2024, and interest will be paid semi-annually, on May 20 (postponed on holidays) and November 20 of each year, and the principal will be repaid and the last interest will be paid on May 20, 2054.

This year's government work report pointed out that in order to systematically solve the problem of funding 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.

Where are ultra-long-term special government bonds invested in? What impact will it have on institutional asset allocation? Can ordinary people buy it? This article will take you to answer them one by one.

Ultra-long-term special treasury bonds "opened" this Friday

In the bond market, interest rate bonds with a maturity of more than 10 years are generally considered to be "ultra-long-term bonds". Compared with ordinary government bonds, ultra-long-term bonds can alleviate the pressure of debt repayment in the short and medium term, exchanging time for space.

Judging from the entire 1 trillion yuan ultra-long-term special treasury bond issuance arrangement this year, the maturity involved is 20 years, 30 years, and 50 years, and the number of issuances is 7, 12, and 3 respectively, and the interest payment method is to pay interest on a semi-annual basis. The issuance time is distributed from mid-May to mid-November, of which the 30-year ultra-long-term special treasury bonds will be issued on May 17, the 20-year ultra-long-term special treasury bonds will be issued on May 24, and the 50-year ultra-long-term special treasury bonds will be issued on June 14.

2024 ultra-long-term special treasury bond issuance arrangement

Li Yong, chief analyst of Soochow Fixed Income, said in an interview with reporters that from the perspective of the term structure, the maturity of the special treasury bonds is richer and longer-term than before. On the one hand, it meets the definition of "ultra-long-term", and on the other hand, it constructs a more complete Treasury yield curve by enriching the term structure, and at the same time gives market investors the space to choose the appropriate maturity.

In addition, the pace of issuance is relatively stable. "20-year 5~11 months issued once a month; Two will be issued every month in June ~ October for 30 years, and one will be issued every month in May and November; The 50-year term is issued monthly in June, August and October. Compared with the previous centralized issuance within 2~3 months, the slow issuance is conducive to the gradual promotion of project implementation, and complements the issuance rhythm of local special bonds. Li Yong said.

Feng Lin, director of the research and development department of Oriental Jincheng, also said that ultra-long-term special treasury bonds will be issued from the initial offering on May 17 to the completion of issuance in mid-November, with a total of 22 issuances. Although the amount of each issuance has not yet been disclosed, it is likely to be characterized by small and frequent issuances. From the perspective of issuance arrangements, the issuance cycle of 1 trillion yuan of ultra-long-term special treasury bonds this year is longer than market expectations, and the pace of issuance is relatively flat, which is conducive to avoiding the staged pressure on the capital side due to centralized issuance.

In fact, this is not the first time that ultra-long-term special government bonds have been issued. In its history, the mainland has issued five special treasury bonds, including three new issuances (1998, 2007, 2020) and two sequels (2017 and 2022).

Specifically, in 1998, the mainland first issued 270 billion yuan of special treasury bonds to the four major state-owned banks, mainly to supplement the capital of wholly state-owned commercial banks. In 2007, China issued 1.55 trillion yuan of special treasury bonds to fund the establishment of CIC. The most recent was in 2020, when 1,000 billion yuan of special anti-epidemic treasury bonds were issued.

Lian Ping, president and chief economist of Guangkai Chief Industry Research Institute, pointed out that "special treasury bonds" usually have two meanings. First, it refers to the investment of funds in treasury bonds issued for specific targets and with a clear purpose. Historically, most of the special treasury bonds are issued when the macro environment has undergone major changes, the economy has suffered major shocks, or when it is facing huge risks, and is earmarked for the construction of major national strategies and key areas, or to respond to public crises such as major epidemics and natural disasters. Second, it is different from ordinary treasury bonds, which are usually not included in the fiscal deficit, and their revenues and expenditures are included in the budget of central government funds, and the approval mechanism and process for issuance are also relatively flexible.

Regarding the investment direction of ultra-long-term special treasury bonds this year, Liu Sushe, deputy director of the National Development and Reform Commission, introduced at a press conference in mid-April that in terms of support areas, ultra-long-term special treasury bonds focus on accelerating the realization of high-level scientific and technological self-reliance and self-reliance, promoting urban-rural integration development, promoting regional coordinated development, improving the security capacity of food and energy resources, promoting high-quality population development, and comprehensively promoting the construction of a beautiful China.

The "asset shortage" in the bond market is expected to ease

It is worth mentioning that can the issuance of ultra-long-term special treasury bonds alleviate the current situation of "lack of assets" in the bond market?

Wu Zhiwu, senior director of the R&D department of China Securities Pengyuan, told reporters that there are many reasons behind the current market "lack of assets", including economic development, policy regulation and market supply. "Ultra-long-term special treasury bonds have the characteristics of long issuance period, relatively high yield, and income tax exemption, and have become an important asset for institutional allocation. Although the issuance of ultra-long-term special treasury bonds cannot change the current situation of 'asset shortage,' it is conducive to alleviating the current 'asset shortage' from the supply side. Wu Zhiwu said.

Talking about the impact of the issuance of ultra-long-term treasury bonds on the asset allocation of institutions, Wu Zhiwu told reporters that first, in the context of abundant liquidity and a bullish bond market, institutions generally extend the duration and ask for income from the duration, so the long-term product of ultra-long-term treasury bonds can meet the investment preferences of institutions. Second, because banks used to be important institutions in the allocation of treasury bonds, in order to alleviate the risk of "maturity mismatch" in the banking industry, the issuance of ultra-long-term special treasury bonds may introduce non-bank institutions such as insurance.

Li Yong told reporters that the issuance of ultra-long-term special treasury bonds can marginally alleviate the situation of "asset shortage". Since the beginning of 2024, the yields of 10-year and 30-year treasury bonds have fallen significantly, and the "asset shortage" is one of the important reasons. For institutional allocation, ultra-long-term special treasury bonds can provide a safe and relatively attractive bottom position for allocation orders in the context of falling interest rates, but it should be noted that for trading orders, longer duration means greater risk of interest rate fluctuations, and the balance between risk and return needs to be considered.

Experts suggest that consideration could be given to both institutions and individuals

The reporter noted that as the interest rate on bank deposits continues to fall, the savings treasury bonds with guaranteed principal and interest and higher returns than time deposits of the same maturity are favored by individual investors.

So, can the people buy the ultra-long-term special treasury bonds issued this time? It is understood that this depends on the issuance method, if it is issued to the public, it can be purchased; If it is a directional issuance, it cannot be purchased.

Lian Ping believes that ultra-long-term special treasury bonds can be considered for issuing to institutions and individuals at the same time. In recent years, mainland residents have a strong demand for investment, and ultra-long-term special treasury bonds are guaranteed by national credit, which has the advantages of low risk, strong liquidity, exemption from interest income tax, etc., and higher returns than medium- and short-term treasury bonds, making them more ideal investment products.

"Judging from past experience, the 1998 special treasury bonds were issued to institutions, while the 2020 anti-epidemic special treasury bonds explicitly encourage individuals and micro, small and medium-sized enterprises investors to subscribe. In order to promote the smooth issuance of this round of ultra-long-term special treasury bonds, it is suggested that the issuance of ultra-long-term special treasury bonds to institutions and individuals should be considered at the same time. Of course, the target of the issuance of specific bond batches can be appropriately focused on and distinguished. Lian Ping said.

National Business Daily

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