May 17 issued a trillion ultra-long treasury bonds, can ordinary people buy them?

Southern Metropolis Daily

2024-05-15 07:04Published on the official account of Guangdong Southern Metropolis Daily

The prototype of the Jiangmen neutrino experiment detector has emerged. The ultra-long-term special treasury bonds will focus on supporting tasks such as accelerating the realization of high-level scientific and technological self-reliance and self-reliance.　Xinhua News Agency

On May 13, the Ministry of Finance announced the relevant arrangements for the issuance of general treasury bonds and ultra-long-term special treasury bonds in 2024. According to the arrangement, the maturity of ultra-long-term special treasury bonds includes 20 years, 30 years and 50 years, and interest is paid on a semi-annual basis. Among them, the 30-year maturity will be issued on May 17 first.

In the view of industry experts, this round of ultra-long-term special treasury bonds is an important force of active fiscal policy, which is conducive to stimulating investment, expanding consumption, helping to build a modern industrial system, optimizing the debt structure of the central and local governments, and better matching the capital needs of major projects with a longer term, and improving the efficiency of the use of fiscal funds. In addition, it has released a clear signal that fiscal policy will be more active in supporting economic development, which will help boost market confidence, stabilize expectations, and promote the accelerated recovery of the macroeconomy. For many people who are concerned, can individual investors buy ultra-long-term special treasury bonds? Professionals say it's not clear yet.

Issued by the central government to reduce the debt risk of local governments

In fact, since the end of 2023, the two sessions and documents in many places have mentioned planning projects to strive for financial support from "ultra-long-term special treasury bonds".

On March 5 this year, the State Council's "Government Work Report" proposed: "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."

So, what is so special about the "ultra-long-term special government bonds" that have been often mentioned this year? How to understand its connotation?

Dong Ximiao, chief researcher of Zhaolian Financial, said in an interview with a reporter from Nandu that as the name suggests, the three characteristics of "ultra-long-term special treasury bonds" are: ultra-long-term, special, and treasury bonds.

First, the term is "ultra-long-term". Generally speaking, the issuance period of more than 10 years is "ultra-long-term", and the maturity of ultra-long-term special treasury bonds to be issued this year is divided into 20 years, 30 years, and 50 years, which is worthy of the name.

The second is that the use is very "special". According to the 2024 Government Work Report, the ultra-long-term special treasury bonds to be issued in the next few years are mainly to systematically solve the financial problems of some major projects in the process of building a strong country and national rejuvenation.

"Moreover, ultra-long-term special government bonds will not be included in the deficit and will not increase the deficit ratio." Dong Ximiao said. The reporter noted that Guotai Junan also specifically mentioned in its research report that ultra-long-term special treasury bonds are first of all "special treasury bonds", which are not included in the deficit, that is, in the government fund budget, not in the general public budget.

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.

Zhu Zhiqi, director of the Department of Finance, Taxation and Public Administration of Tianjin University of Finance and Economics, said in an interview with a reporter from Nandu that ultra-long-term special treasury bonds are issued by the central government and are not local government debts, which are conducive to optimizing the debt structure between the central government and the mainland government, improving the leverage ratio of the central government, reducing the debt risk of local governments, and reducing the burden of investment expenditure on local governments.

Third, it is a "national debt" in nature. Dong Ximiao told the reporter that the main body of ultra-long-term special treasury bonds is the central government, which is backed by national credit and has the highest credit degree and margin of safety.

Reduce short-term speculation and boost market confidence

What is the impact of the issuance of ultra-long-term special treasury bonds on market liquidity? In the eyes of industry insiders, this may depend on the issuance method, the total amount of bond issuance and the pace of issuance.

Galaxy Securities previously said that the last time the mainland issued ultra-long-term special treasury bonds was in 1998, which was mainly used to supplement the capital of the four major banks, which had little impact on market liquidity. Historically, what impact is this offering expected to have on the economy and the market?

Dong Ximiao believes that the issuance of ultra-long-term special treasury bonds is of great significance in three aspects. First of all, it will be used for the implementation of major national strategies and security capacity building in key areas, solve the problem of shortage of funds for the construction of major projects, stimulate investment, expand consumption, and help build a modern industrial system. Second, optimizing the debt structure of the central and local governments, issuing them in the name of the central government, and supporting local economic construction, will help reduce the leverage ratio of local governments and prevent local debt risks.

"In addition, the release of a clear signal that fiscal policy will be more active in supporting economic development, will help boost market confidence, stabilize expectations, and promote the acceleration of macroeconomic recovery. In order to meet the demand for medium- and long-term liquidity for the issuance of government bonds and ultra-long-term special government bonds, it is expected that the central bank will likely reduce the reserve requirement ratio in the second quarter to provide long-term stable and low-cost funds for financial institutions and create a more suitable liquidity environment. Dong Ximiao said.

Peng Peng, executive chairman of the Guangdong Provincial Institutional Reform Research Association, also said in an interview with a reporter from Nandu: "Like the current encouragement of long-term funds into the market and the irregular announcement of northbound capital inflows, it is conducive to reducing the short-term speculation effect." That is, let investors and the country form a community of destiny. The issuance of ultra-long-term special treasury bonds, coupled with the reduction of medium and long-term deposit products by banks, may be of great significance to insurance funds and social security funds. ”

Filling the gap in investment and dealing with short-term economic pressures

"Typical special treasury bonds are basically issued in a centralized manner within the year, and they have certain emergency characteristics or solve specific problems for a period of time, such as the capital adequacy ratio of commercial banks, excess foreign exchange liquidity, and the impact of the new crown. The issuance of special treasury bonds is 'issued for several consecutive years' and is mainly used for investment and construction, and its issuance rhythm and implementation purpose are more similar to the long-term construction bonds issued from 1998 to 2008. Guotai Junan said that the anchoring of long-term construction treasury bonds for investment and construction, the gradual transformation of scale reduction, and investment in projects have certain reference significance for this round of ultra-long-term special treasury bonds.

Why, then, did you choose to propose the issuance of special government bonds again this year?

In this regard, Wang Hao, co-chief analyst of Guotai Junan Macro, believes that there are two main reasons: First, in order to promote the transformation of economic momentum, build a modern industrial system, develop new quality productivity, and gain international competitive advantages, long-term capital matching is needed, and ultra-long-term special treasury bonds can make up for the lack of private investment and venture capital.

Second, to cope with short-term economic pressure, the demand side needs to make further efforts. This year's "Government Work Report" mentions that the mainland is currently facing difficulties and challenges, that is, the lack of momentum for world economic growth, the frequent occurrence of regional hotspot issues, and the increasing complexity, severity and uncertainty of the external environment. The foundation for the sustained recovery of the mainland economy is not stable, the effective demand is insufficient, some industries have overcapacity, social expectations are weak, there are still many risks and hidden dangers, there are blockages in the domestic cycle, and there are interferences in the international cycle. Some small and medium-sized enterprises are struggling to operate. The pressure on total employment and structural contradictions coexist, and there are still many shortcomings in public services.

In the face of these problems, further reform and promotion measures need to be taken, especially on the demand side.

Interest accrual: It is paid semi-annually and can be paid on the 20th

It is worth noting that after the news of the imminent issuance of ultra-long-term special treasury bonds was released, many people were concerned: Can individual investors buy ultra-long-term special treasury bonds?

In this regard, Dong Ximiao said: "It is not clear whether this round of ultra-long-term special treasury bonds will be issued to individual investors." Guangkai Chief Industry Research Institute also pointed out that for individual investors, whether they can participate in the subscription depends on the issuance object of the specific bond batch. Judging from past experience, the 1998 special treasury bonds were issued to institutions, while the 2020 anti-epidemic special treasury bonds explicitly encouraged individuals and micro, small and medium-sized enterprises investors to subscribe.

How is interest calculated on ultra-long-term special treasury bonds? It is also worth paying attention to how the principal is repaid.

According to the announcement of the Ministry of Finance, the interest on this treasury bond will be calculated from May 20, 2024, and the interest will be paid semi-annually, and the interest payment date will be May 20 (postponed accordingly on holidays, the same below) and November 20 of each year, and the principal will be repaid and the last interest will be paid on May 20, 2054. The tender for the current treasury bonds will be distributed until May 20, 2024, and will be listed for trading on May 22.

Integration: Yang Jingbo

Written by: Nandu reporter Wang Yufeng, Luo Manyu, Zhao Weijia

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