There is new news on ultra-long-term special government bonds. On May 13, the official website of the Ministry of Finance announced the notice on the relevant arrangements for the issuance of general treasury bonds and ultra-long-term special treasury bonds in 2024, including 20-year, 30-year, 50-year and other categories, of which the 30-year product will be launched on May 17.
According to the previous government work report, 1 trillion yuan of ultra-long-term special treasury bonds will be issued within the year. Some analysts pointed out that the setting of ultra-long-term special treasury bonds with a variety of maturities can not only stimulate current investment and consumption, but also lay a solid foundation for long-term high-quality development, and at the same time help local finances to recuperate. In the future, the People's Bank of China is likely to support it in the form of RRR cuts or medium-term lending facility (MLF) operations, and it is not ruled out that it may cooperate with the interest rate cut policy to reduce the financing cost of the real economy.
The issuance schedule is released
According to the notice issued on the official website of the Ministry of Finance, the varieties involved in this ultra-long-term special treasury bond include 20 years, 30 years and 50 years, of which the 20-year will be issued on May 24, the 30-year will be issued on May 17, and the 50-year will be issued on June 14. The relevant varieties will be issued in mid-November, and the interest payment method is semi-annual interest.
In addition, according to the circular arrangement, in addition to the above-mentioned ultra-long-term special treasury bond products, the Ministry of Finance will also issue multi-term treasury bond products this year, including key maturity treasury bonds, savings treasury bonds and other different categories. According to the different types and terms of issuance, the interest payment methods include annual interest payment, semi-annual interest payment, and one-time repayment of principal and interest at maturity.
Image source: official website of the Ministry of Finance
Once the issuance arrangement was announced, it quickly became the focus of market attention. The so-called ultra-long-term special treasury bonds usually refer to interest rate bonds with a maturity of more than 10 years, while "special" refers to treasury bonds issued during special periods with a specific goal of capital investment and a clear purpose.
The market generally believes that, judging from historical experience, the mainland has issued a total of five special treasury bonds, including three new issuances and two sequels. In terms of maturity, the shortest of the five special treasury bonds in the past five special treasury bonds was 3 years, and the longest was 30 years. "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." Lian Ping, president and chief economist of Guangkai Chief Industry Research Institute, pointed out.
Regarding the issuance of ultra-long-term special treasury bonds, Lian Ping said that compared with the previous five special treasury bonds, this round of ultra-long-term special treasury bonds has three outstanding characteristics, namely, the issuance period is particularly long, the continuous issuance and the scale is particularly large, and the correlation between the purpose of the issuance and the economy and high-quality development is particularly high. It can not only provide abundant ultra-long-term funds for major projects and major projects with long construction cycles and slow return on investment, but also dilute the interest payment pressure of government bonds in the ultra-long-term period.
Lian Ping believes that this round of ultra-long-term special treasury bonds will focus on the implementation of major national strategies and security capacity building in key areas, involving scientific and technological innovation, urban-rural integrated development, regional coordinated development, food and energy security, high-quality population development and other fields. These areas are closely related to the transformation and upgrading of the mainland economy and the high-quality development in the next few decades, and will play a vital role in promoting the achievement of the goal of socialist modernization.
It has a triple meaning
Earlier, the 2024 government work report proposed that in order to systematically solve the funding problem 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 from this year, which will be used for the implementation of major national strategies and security capacity building in key areas, and 1 trillion yuan will be issued this year.
During the National People's Congress and the National People's Congress held in March 2024, Zheng Shajie, director of the National Development and Reform Commission, also talked about the issuance of ultra-long-term special treasury bonds at a press conference on the theme of economy. Zheng Shajie said that the issuance and use of ultra-long-term special treasury bonds is a major policy measure, and expanding effective investment is an important starting point. The ultra-long-term special treasury bonds will be used for "twofold": special for the implementation of major national strategies and security capacity building in key areas, which can not only stimulate current investment and consumption, but also lay the foundation for long-term high-quality development.
Talking about the impact of the issuance of ultra-long-term special treasury bonds, Lian Ping said that the issuance of ultra-long-term special treasury bonds for several consecutive years starting this year is a major strategic measure launched by the central authorities in light of the opportunities and challenges facing the mainland's economic development in the coming period, and its significance and impact are very far-reaching. From the perspective of policy effects, the issuance of ultra-long-term special treasury bonds has a triple significance, which can not only stimulate current investment and consumption, but also build a solid foundation for long-term high-quality development, and at the same time benefit local fiscal recuperation, which will bring benefits in many aspects.
On the other hand, treasury bonds are an important component of the bond market, and the issuance of ultra-long-term special treasury bonds will also have an impact on the bond market. Ming Ming, chief economist of CITIC Securities, said that the issuance of special treasury bonds will increase the supply of bonds, and the use of fiscal funds will also help improve fundamentals and boost market expectations, so theoretically, the issuance of special treasury bonds will form an upward impetus for interest rates.
"However, considering the relatively flat pace of issuance and the fact that there is still an asset shortage in the bond market, we expect that the adjustment will be limited, and there may be some disturbance to the yield of government bonds at individual issuance points. With the issuance of special government bonds, it will play a key role in the construction of major projects and economic recovery. Ming Ming added.
Experts suggest that consideration could be given to both institutions and individuals
At present, the Ministry of Finance has only disclosed the time, duration and interest payment method of the ultra-long-term special treasury bonds, but has not yet disclosed the specific amount, coupon rate and target of each issuance. Whether individual investors can participate in purchases through bank outlets and counters has also attracted widespread attention.
In recent years, mainland residents have had a strong demand for investment, especially since 2023, as commercial banks have successively lowered deposit interest rates, treasury bond products with national credit as a guarantee and higher yields have been favored by investors, and many sales outlets have seen a rush to buy quotas. Ultra-long-term special treasury bonds have the advantages of low risk, strong liquidity, exemption from interest income tax, and higher returns than short- and medium-term treasury bonds, so they are also regarded as ideal investment products.
However, whether individual consumers can purchase this ultra-long-term special treasury bond depends on the specific issuance method. In order to promote the smooth issuance of this round of ultra-long-term special treasury bonds, Lian Ping suggested that the issuance of bonds to institutions and individuals at the same time could be considered, but the issuance targets of specific bond batches could be appropriately focused on and distinguished.
In addition, in terms of the use of ultra-long-term special treasury bond funds, on April 22, Wang Jianfan, director of the Budget Department of the Ministry of Finance, pointed out at a press conference held by the State Council Information Office that the rhythm of issuance will be reasonably arranged, combined with the actual situation of ultra-long-term special treasury bond funds, study the establishment of a regulatory mechanism, strengthen the supervision of the whole process of fund allocation, issuance and use, and ensure standardized, safe and efficient use.
In terms of monetary policy support, Ming Ming believes that the People's Bank of China is likely to support it in the form of RRR cuts or MLF operations during the year, and it is not ruled out that it may cooperate with the interest rate cut policy to reduce the financing cost of the real economy. Considering that the supply of local government bonds will also accelerate from May, liquidity support may be provided in the form of RRR cuts in the second and third quarters, and after the exchange rate pressure is reduced, interest rate cuts may be used to maintain a low interest rate environment to help the smooth issuance of treasury bonds at a lower cost.
Beijing Business Daily reporter Liao Meng