In the past few days, the topic of ultra-long treasury bonds has attracted great attention from the market.
According to the plan of the Ministry of Finance, in the future, the mainland will issue 1,000 billion yuan of special treasury bonds, including 300 billion yuan for 20 years, 600 billion yuan for 30 years, and 100 billion yuan for 50 years.
What is the concept of 50 years?
If a young man buys this special treasury bond since he graduated from college, he may not be able to get it back when he retires.
If a retiree buys a 50-year Treasury bond until he dies, most people cannot wait for the principal of the Treasury bond to be withdrawn.
It is precisely because the term is too long that many investors have some doubts.
Some people even think that the country has run out of money, so it will issue ultra-long-term government bonds?
With such a long national debt, the national debt is still there after people die, so don't you plan to pay it back?
Is this the Chinese version of QE? Will the market flood in the future?
And these doubts stem from everyone's lack of understanding of ultra-long government bonds.
Compared with ordinary government bonds, ultra-long-term government bonds and special government bonds are rarely issued.
So far, the mainland has only issued three special treasury bonds, and each time it has been issued at a critical period.
In 1998, in response to the Asian financial crisis, the state issued special treasury bonds to inject capital into the four major banks to cope with various financial risks.
In 2007, when the mainland's foreign exchange reserves reached their peak, the state set up a special China Investment Corporation (CIC) and issued special treasury bonds to inject capital into the company.
When the epidemic occurred in 2020, in order to cope with the impact on the economy after the outbreak of the epidemic, the state issued another special treasury bond.
However, the maturity of these special government bonds is not so long, the longest of which is 30 years in 1998, and rarely 50 years.
In the past few decades, the mainland has actually issued 50-year treasury bonds once in 2009, once in December 2023, and three times in June 2024.
In other words, the 50-year treasury bond has not matured so far, and because of this, everyone does not know much about the 50-year treasury bond, and even some people dare not invest in it.
What I want to say here is, if you can grab it, don't hesitate to buy it.
If you have the opportunity to buy it and give it up, you will definitely regret it for three generations.
Why is the 50-year Treasury worthwhile?
First of all, the national debt is very safe.
Treasury bonds are bonds backed by the state's credit, and their security level is very high, even safer than bank deposits.
Banks may also go bankrupt or have difficulty in cashing due to various improper operations, while treasury bonds are a kind of bonds issued by the state's finances, which are very safe and basically free of any risk.
Therefore, whether it is a 20-year treasury bond, a 30-year treasury bond or a 50-year treasury bond, it can be taken back unconditionally and normally at maturity, and there will be no loss.
Second, the long-term yield on government bonds is substantial.
As for the interest rate on the 50-year Treasury bond issued this time? At present, the Ministry of Finance has not announced it, but according to the actual situation in the past, the longer the term, the corresponding interest rate will definitely be higher.
However, treasury bonds are also priced with reference to market interest rates, and the current bank interest rate is relatively low, so the interest rate of the treasury bonds issued this time is not expected to be too high.
Referring to the effective interest rate of recently issued treasury bonds, the interest rate of 50-year treasury bonds should be between 2.3%~2.8% (the third and fourth savings bonds of 2024 just issued on May 10: the interest rate for 3-year bonds is 2.38%, and the interest rate for 5-year bonds is 2.5%).
Although this interest rate cannot be compared with some small banks in the market, it is definitely higher than the deposit interest rate of some large state-owned commercial banks.
Referring to the 50-year treasury bonds issued before, the batch of ultra-long treasury bonds to be issued in June should be book-entry interest-bearing treasury bonds, with a fixed interest rate and semi-annual interest payments.
In the long run, this is a big advantage.
This is because judging from the actual trend of the mainland's banking industry and the performance of the overall economic financing, the deposit interest rate of the entire market will definitely continue to fall in the future, and there may be negative interest rates one day.
Once the treasury bonds are settled, the Ministry of Finance will pay interest according to the coupon rate issued in the future, regardless of how the bank interest rate changes.
It is possible that after 10 years, the interest rate of the five-year bank has dropped by about 1.5%, but the interest rate on this batch of 50-year treasury bonds is still paid at about 2.5%, which is its advantage, and those who subscribe will feel very fragrant at that time.
Finally, ultra-long-term government bonds also have flexibility.
The 50-year term is indeed a bit long, and many people are worried about liquidity, and even many people are worried that people are dead and the debt has not yet arrived.
In fact, you don't have to worry at all, because this kind of ultra-long treasury bonds generally use book-entry treasury bonds, which can be freely bought and sold in the secondary market.
For these ultra-long treasury bonds, if everyone does not have high requirements for liquidity and only wants to get interest, then they can be passed down from generation to generation, and truly achieve the inheritance of three generations of treasury bonds.
Of course, if you have high requirements for liquidity, such as if you need money for something in the future, you can also sell it through the secondary market.
As for some people's worries that the price of government bonds may fall due to the impact of interest rate fluctuations, resulting in a loss of income, we do not rule out the possibility of such a scenario.
But in the long run, I don't think the yield on Treasuries will be too low, even in the secondary market.
This is because the real yield on Treasury bonds is inversely correlated with the interest rate of the bank.
Once the interest rate on bank deposits continues to fall, more investment institutions and individuals will buy treasury bonds, which will push the price of treasury bonds higher.
As the price of Treasury bonds rises, those who buy in the middle of the country or institutions may face the risk of strong winds or even losses.
But for those who buy at the beginning of the issuance, when the price rises, everyone can sell at a good price, which makes money.
After taking into account all the conditions, if the 50-year treasury bonds are officially issued in June, everyone can buy as much as possible.
Now the biggest concern is whether everyone has the opportunity to buy it.
If nothing else, this ultra-long treasury bond should not be issued directly to the public, but to the primary market, that is, directly sold to banks and securities institutions, each of which will be allocated a certain amount.
After these banks and securities institutions have allocated quotas, everyone can open accounts with them to buy these ultra-long treasury bonds.
However, because the amount of treasury bonds is limited this time, of which the 50-year treasury bonds are only 100 billion, it is expected that many people will grab them, and whether they can grab them depends on everyone's luck.