On May 13, the official website of the Ministry of Finance released the "2024 Arrangements for the Issuance of General Treasury Bonds and Ultra-long-term Special Treasury Bonds" (hereinafter referred to as the "Arrangements").
The arrangement pointed out that ultra-long-term special treasury bonds with a total scale of 1 trillion yuan will be issued this year, with maturities of 20 years, 30 years and 50 years respectively.
As soon as the news was issued, it triggered a wide discussion in the market, and various media also started to discuss this batch of treasury bonds. I'm sure you've seen some, but I don't see what I want to see, such as: What is the interest rate? What is the purpose of this? Can ordinary people buy it? How to buy? Can I sell it if I buy it?
After looking at some information, I would like to share my thoughts on this. If there are any shortcomings, please forgive me!
Let's talk about the interest rate first, although the Ministry of Finance has issued an arrangement for ultra-long-term special treasury bonds, it has not really announced the interest rate, which still leaves a little suspense for everyone, as for how much, we will know until the sale date. Interest rates on Treasury bonds of different maturities are also different.
According to the information seen from the official website of the Ministry of Finance of the mainland, the interest rate of the 1-year treasury bond is 1.64%, the 5-year is 2.1%, the 10-year is 2.29%, and the 30-year is 2.59%. As for the 20-year and 50-year tenors, the official website does not show them, but we can probably guess that the 20-year interest rate is around 2.44%, and the 50-year interest rate is around 2.89%.
However, from the perspective of coupon rates, the interest rate of ultra-long-term treasury bonds is not high, and it is not too attractive, and the five-year deposit interest rate of the four major state-owned banks has reached 2.75%, and some local banks may exceed 5%.
What are the advantages of national debt? The reason why the coupon rate of treasury bonds is much lower than the interest rate of bank fixed deposits is that treasury bonds are guaranteed by the credit of the state, which is the highest level of security proof of assets. You can either sell the Treasury bonds or use them as collateral when you need the money. Therefore, neither the security nor the flexibility can be compared to fixed deposits.
In addition, in the long run, in the next 20 years, the five-year fixed deposits of mainland banks are also likely to be less than 2%, which shows the advantage of ultra-long-term government bond interest rates.
What is the purpose of this treasury bond issuance? Treasury bonds are generally divided into ordinary treasury bonds and special treasury bonds, ordinary treasury bonds are rain and dew evenly wetted type, and special treasury bonds are treasury bonds with a focused direction.
According to the press conference of the State Council Information Office earlier, this year's ultra-long-term special treasury bonds mainly focus on high-level scientific and technological self-reliance and self-reliance, urban-rural integrated development, regional coordinated development, high-quality development of food and energy, high-quality population development, and the construction of a beautiful China.
The above-mentioned directions are actually the direction of China's transformation, especially in terms of high-level scientific and technological self-reliance and self-reliance, one is to solve the problem of the West's bottleneck, and the other is also the direction of the mainland's transformation to a higher-level economic development model, both the United States and Japan have experienced such a process.
The direction of special treasury bond support is also an area that the mainland will focus on supporting in the short term, and there are also great opportunities in it, and some related enterprises may soar to the sky.
Why did you do this through ultra-long-term special government bonds? Because it may require more than 1 trillion yuan, and it is not possible to successfully transform in three or five years, and if it is done in the form of short-term government bonds, it may bring a liquidity crisis to the treasury. Our current approach is to trade time for space to transform the economy.
When is the release date? Are there so many people subscribing?
Maybe now netizens are used to hearing the news of which celebrity or Internet celebrity has earned 100 million, and they will feel that 1 trillion is not much money. Actually, that's a lot of 1 trillion. Because our country has only 1.4 billion people, 1 trillion yuan can be distributed to 714.28 yuan if it is distributed to everyone. If each of us takes the more than 700 yuan we get to spend, all the merchants will be very happy.
Therefore, such a large sum of money cannot be issued all at once, it is done in installments. It is understood that the 20-year, 30-year, and 50-year ultra-long-term special treasury bonds have been divided into two batches, three batches, and one batch respectively. It is important to note that the batch here does not refer to 1 time, it may have 3-4 times. Overall, there will be a total of 22 issuances, with an average of $45.4 billion each time.
The earliest issuance was a 30-year ultra-long-term special treasury bond, dated May 17, with an issuance amount of 40 billion yuan. The coupon rate is determined through competitive bidding. Interest is paid semi-annually, which is characteristic of ultra-long-term government bonds. The latest issuance was on November 15, and the issuance cycle of special government bonds lasted for half a year.
Can the average person buy these treasuries?
The answer is yes, whether it is a bank or a brokerage company, the trading software may have related business, we just need to know more or ask more relevant personnel.
If you buy these ultra-long-term treasury bonds, do you really have to take 20, 30, or 50 years to see the principal?
Actually, no, because they have a trading price, and we can trade it as long as it is within the specified time, which is the same as buying and selling stocks. You can even earn a little bit of the income from the rise in the price of government bonds. As a result, it is more flexible than bank fixed deposit rates.
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