With the imminent issuance of ultra-long-term special treasury bonds, will individual investors be able to buy and sell them? In addition to savings bonds, can individual investors buy book-entry bonds? What are the purchase channels?
With these problems, the reporter recently learned from research and interviews that there are two main types of treasury bonds that investors come into contact with: savings treasury bonds and book-entry treasury bonds, and the ultra-long-term special treasury bonds to be issued are book-entry treasury bonds. Book-entry treasury bonds can be traded in the interbank bond market, the exchange bond market and the over-the-counter bond market of commercial banks, the latter two of which are open to individual investors. At the same time, individual investors can also indirectly participate in treasury bond investment by subscribing to asset management products such as treasury bond ETFs.
Earlier, the relevant person in charge of the central bank said when talking about the development of over-the-counter bond business that at present, the scale of government bonds directly held by mainland residents is small, and there is still a lot of room for improvement compared with the mature bond market. Investing in the bond market through over-the-counter channels can efficiently convert savings into bond investment and increase residents' property income.
Under the low interest rate, the government bond has gradually attracted more attention
Recently, due to factors such as the reduction of deposit interest rates by some banks and the suspension of the sale of large-amount certificates of deposit, the attention of treasury bond products such as savings treasury bonds has further increased.
On May 10, the third and fourth phases of this year's certificate savings bonds were officially put on sale, with the annual coupon rates of 3-year and 5-year varieties being 2.38% and 2.5% respectively. The reporter visited a number of bank outlets in Beijing and learned that the quota for the opening and sale of some outlets was quickly sold out, indicating that investors' enthusiasm for buying savings treasury bonds continued to be high.
The phenomenon of "daylight" has also appeared in local government bonds. On May 9, Guangdong provincial government bonds were officially offered to investors for the first time this year through the over-the-counter bond market of commercial banks, with a coupon rate of 2.2% per annum, which was also welcomed by investors. The Guangdong branch of the Agricultural Bank of China sold out all the quota of 500 million yuan within 1 minute, and individual investors accounted for 100%.
According to the 2024 treasury bond issuance arrangement announced by the Ministry of Finance, from March to November this year, one three-year and one five-year savings treasury bond will be sold on the 10th of each month. Judging from the past, the total face value of a single issuance of savings bonds is usually only 30 to 40 billion yuan, but compared with the strong demand, it still seems that "there are more monks and less meat," and it is very difficult to grab the demand in short supply.
Source: Ministry of Finance website
In contrast, the frequency and scale of book-entry treasury bonds are much larger, so can individual investors buy book-entry treasury bonds? In particular, the issuance of ultra-long-term special treasury bonds is about to start, will individual investors be able to buy them in the future? These topics have attracted the attention of many ordinary investors.
Source: Ministry of Finance website
Previously, some experts suggested that ultra-long-term special treasury bonds could be issued to both institutional and individual investors. However, according to the Notice on Matters Concerning the Issuance of Ultra-long-Term Special Treasury Bonds (Phase I) in 2024, ultra-long-term special treasury bonds, like general book-entry treasury bonds, are issued through the government bond issuance system of the Ministry of Finance through bidding and for members of the book-entry treasury bond underwriting syndicate.
However, the reporter learned that after the book-entry treasury bonds are listed and traded in the inter-bank bond market and the exchange bond market, individual investors can buy and sell relevant listed treasury bonds through over-the-counter bond accounts and securities accounts.
In fact, not only book-entry treasury bonds, but also local government bonds, corporate credit bonds and other bond varieties can be bought and sold as long as they are traded in the over-the-counter bond market and the exchange market and investors meet the suitability requirements.
For example, the 1-year 2024 book-entry interest-bearing (nine-issue) treasury bonds issued last month were listed on the interbank bond market, the bank counter bond market, the Shanghai Stock Exchange and the Shenzhen Stock Exchange on April 29, although the abbreviations and codes in each market are different, and the codes are 240009. IB (interbank market), 240009.BC (bank over-the-counter bond market), 019740.SH (Shanghai Stock Exchange), 102265.SZ (Shenzhen Stock Exchange), but investors are trading the same bond. This also means that individual investors can easily buy and sell the Treasury bond through their securities account.
Over-the-counter bonds will better meet investor demand
For ordinary investors, the over-the-counter bond market is a more unfamiliar existence than the exchange bond market.
According to experts, the over-the-counter bond market is an extension of the interbank bond market and belongs to the retail market.
In February this year, the People's Bank of China (PBoC) issued the Notice on Matters Concerning the Counter Business of the Interbank Bond Market, which explained the matters concerning investors' investment in the interbank bond market through the establishment of institutions through the counter business. The notice will come into force on May 1, 2024. It is clarified that all kinds of bonds that have been traded and circulated in the inter-bank bond market can be invested and traded through the counter on the premise of complying with the investor suitability requirements.
Highlight the point
Investors can invest in bonds in the interbank bond market such as treasury bonds, local government bonds, financial bonds, corporate credit bonds, etc., through the counter business, and various types of bonds that have been traded and circulated in the interbank bond market can be invested and traded through the counter without the approval of the issuer.
The Ministry of Finance recently issued the Notice on Matters Concerning the Over-the-Counter Trading of Government Bonds, which will come into effect on May 1, 2024, which proposes that book-entry treasury bonds and local government bonds can be distributed and traded over the counter in the interbank bond market after the issuance of them.
Experts said that at present, in the context of the continuous decline in deposit interest rates and the yield of wealth management products, and the breaking of rigid payment of commercial banks' wealth management products, the management department has accelerated the development of over-the-counter bond business, which will help to further meet the diversified investment and financing needs of the market.
The relevant person in charge of the central bank said that investing in the bond market through the over-the-counter channel can efficiently convert savings into bond investment and increase residents' property income.
According to data released by the People's Bank of China a few days ago, as of the end of 2023, 30 commercial banks across the country have opened over-the-counter bond business, opening 6.3 million accounts for investors. The data also shows that among the current counter bonds, government bonds, local government bonds and policy financial bonds account for 56%, 21% and 23% respectively.
As for how individuals can buy treasury bonds and local government bonds, industry insiders introduced that in the above 30 commercial banks, including large state-owned banks, joint-stock banks and small and medium-sized banks focusing on local operations, "residents can apply to open a counter bond account at the business outlets or electronic banking channels of these banks, and after binding with their bank cards, they can buy and sell bonds through bank outlets or apps during trading hours, and inquire about bond prices and bond balances." ”
For example, in the "Bond Investment" column of the CCB App, you can see sub-columns about book-entry treasury bonds, local government bonds, financial bonds, etc., which will have corresponding trading period products for individual investors to buy.
Source: CCB App
According to industry insiders, in general, the coupon rate of over-the-counter bonds will be higher than that of bank deposits of the same maturity, and the treasury bonds and local government bonds traded over the counter are government credit with high security, which can meet the financial needs of residents for low risk and stable returns. In addition, the over-the-counter bond trading is flexible, with a minimum investment of 100 yuan, and investors can sell bonds during trading hours when they are in a hurry to use their money, or use bonds as collateral to apply for pledge loans from banks, which has strong liquidity.
Source: China Securities Journal (Peng Yang, Ouyang Jianhuan)