China Business Daily (Reporter Wang Tongxu) On May 17, the 1 trillion yuan ultra-long-term special treasury bond was officially launched.
According to the official website of the Ministry of Finance, the sale will last from May to November this year. According to the arrangement, the maturity of ultra-long-term special treasury bonds includes 20 years, 30 years and 50 years, all of which pay interest on a semi-annual basis. Among them, the 30-year term will debut on May 17, and the 20-year and 50-year terms will go on sale on May 24 and June 14, respectively.
The "Government Work Report" makes it clear that starting from this year, it is planned to issue ultra-long-term special treasury bonds for several consecutive years, 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.
What are ultra-long-term special government bonds? Why do we need to issue ultra-long-term special government bonds? Where will the ultra-long-term special government bonds be invested? What are the implications?
The picture shows the issuance arrangement of ultra-long-term special treasury bonds in 2024. (Picture from the official website of the Ministry of Finance)
Three "Keywords"
"Ultra-long-term special treasury bonds contain three key words: ultra-long-term, special, and treasury bonds. Ultra-long-term, which means that the maturity of bond issuance is generally greater than 10 years; In particular, it is issued on behalf of the state for special purposes, and the funds are earmarked and not included in the government financial deficit; Treasury bonds, which are bonds issued by the central government to raise financial funds, have the highest creditworthiness and are recognized as the safest investment instruments. An investment adviser of China Galaxy Securities told a reporter from China Business Daily.
Pan Helin, a well-known economist, told reporters that ultra-long-term special treasury bonds have the characteristics of no risk, long maturity, higher interest rate than short-term treasury bonds, and large issuance.
It is understood that the mainland issued three special treasury bonds in 1998, 2007 and 2020. The most recent time, in 2020, was the issuance of 1 trillion yuan of special anti-epidemic government bonds to deal with the impact of the new crown epidemic.
Why is ultra-long-term special government bonds being issued at this time? Feng Lin, an analyst at Oriental Jincheng, believes that the arrangement for the issuance of ultra-long-term special treasury bonds is to implement the deployment of this year's "Government Work Report" and the requirements of the Political Bureau of the CPC Central Committee meeting on April 30 to "issue and make good use of ultra-long-term special treasury bonds as soon as possible".
Qu Fang, an investment consultant at Wanlian Securities, told reporters that the mainland's fiscal policy is gradually changing, from the previous US dollar as an anchor to a treasury bond as an anchor. In addition, land finance has been gradually withdrawn in recent years, and the new fiscal strategy, mainly government bonds, will become the mainstream in the future. Ultra-long-term government bonds are issued to support economic growth, and local governments operate and invest in high value-added industries with greater growth potential. Ultra-long-term special government bonds have a long repayment period, which helps the government to make long-term planning and funding arrangements.
"The issuance of ultra-long-term special treasury bonds can exchange time for space and reduce the pressure of debt repayment in the short and medium term. In addition, long-term funding can also be matched with the project life cycle to better support large-scale infrastructure projects and the implementation of long-term national strategic planning. Wu Zewei, a researcher at the Xingtu Financial Research Institute, told reporters.
Where will it be invested?
As for the use of ultra-long-term special treasury bonds, this year's "Government Work Report" gives the answer: 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.
According to Zheng Shajie, director of the National Development and Reform Commission, starting from this year, the next few years will continue to issue ultra-long-term special treasury bonds, which will be used for the implementation of major national strategies and security capacity building in key areas. It can not only stimulate current investment and consumption, but also lay the foundation for long-term high-quality development.
Liu Sushe, deputy director of the National Development and Reform Commission, said at a press conference held by the Information Office of the State Council on April 17 that the ultra-long-term special treasury bonds will focus on supporting key tasks such as accelerating the realization of high-level scientific and technological self-reliance and self-reliance, promoting the integrated development of urban and rural areas, promoting coordinated regional development, improving the security and security capacity of food and energy resources, promoting high-quality population development, and comprehensively promoting the construction of a beautiful China.
"The potential construction needs in these areas are huge, the investment cycle is long, and the existing funding channels are difficult to fully meet the requirements, so there is an urgent need to increase support." The above-mentioned China Galaxy Securities investment adviser said.
What are the implications?
People in the industry generally believe that the issuance of ultra-long-term special treasury bonds can promote the accelerated recovery of the macroeconomy.
Dong Ximiao, chief researcher of Zhaolian and part-time researcher of the Institute of Financial Research of Fudan University, said that the issuance of special treasury bonds has three major significance:
First, it is specially used for the implementation of major national strategies and security capacity building in key areas, to solve the problem of shortage of funds for the construction of major projects, to stimulate investment, expand consumption, and help build a modern industrial system.
The second is to optimize the debt structure of the central and local governments, issue them in the name of the central government, and support local economic construction, which will help reduce the leverage ratio of local governments and prevent local debt risks.
Third, it has released a clear signal that fiscal policy will more actively support economic development, which will help boost market confidence, stabilize expectations, and accelerate 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 may reduce the reserve requirement ratio in the second quarter to provide long-term stable low-cost funds for financial institutions and create a more suitable liquidity environment.
"It needs to be understood that the issuance of ultra-long-term treasury bonds needs to control the total amount and pace of issuance. The issuance of ultra-long-term treasury bonds can only be regarded as a supplement to the mainland's fiscal system, and cannot be encouraged to become a pillar of the fiscal system. Otherwise, it will not only affect the smooth operation of the economy, but also cause fluctuations in exchange rates and instability in social and economic life. Qu Fang said.
Can individuals buy this ultra-long-term special treasury bond? How long do I need to hold it after purchase? What about interest rates? These are the questions that ordinary investors are concerned about at the moment.
The above-mentioned China Galaxy Securities investment consultant said: "The ultra-long-term treasury bonds are book-entry treasury bonds, which can be bought by individuals and institutions, can be purchased at bank counters, online platforms and securities markets, and can be circulated and transferred, without worrying that once purchased, they must be held for 30 or 50 years before they can be redeemed at maturity." ”
For the interest rate of ultra-long-term special treasury bonds, the information on the official website of the Ministry of Finance shows that the coupon rate is determined through competitive bidding on May 17.
"Referring to historical data, the interest rate of the 10-year treasury bonds issued in 2020 is 2.86% (late issuance), so it may be speculated that the interest rate of the ultra-long-term special treasury bonds may be above 3%." said the above-mentioned investment adviser.
(Note: This article does not constitute any investment advice)