The first offering of 40 billion ultra-long-term special treasury bonds has landed, and banks are collecting the willingness of individual investors to buy

On May 17, the first phase of 40 billion yuan of 30-year special treasury bonds was officially issued, and the bonds were fixed-rate interest-bearing bonds, and the coupon rate was determined to be 2.57% after competitive bidding by the underwriting group of 56 financial institutions.

It is understood that the issuance of ultra-long-term special treasury bonds belongs to book-entry treasury bonds, and the Ministry of Finance conducts competitive bidding to financial institutions through the government bond issuance system, and then the winning financial institutions distribute and trade in the bond market, and individual investors can also purchase them through bank counters, securities companies and other channels.

The first financial reporter visited and learned that the bank has not yet clarified whether to participate in the sale of ultra-long-term special treasury bonds, and the sales plan for individual investors is still in the stage of collecting purchase intentions.

The subscription of ultra-long-term special treasury bonds is hot

Judging from the final winning interest rate, the pricing of the 30-year ultra-long-term special treasury bond issuance is higher than the previous prediction of some bidders, which is basically the same as the yield of the 30-year treasury bond after the upward trend on the same day, and 1BP lower than the secondary yield of the 30-year treasury bond on the previous day.

Judging from the enthusiasm for subscription, the subscription multiple of the first ultra-long-term special treasury bonds was 3.90 times. Chen Jianheng, a fixed income analyst at CICC, said that this is significantly higher than the total subscription amount of other 30-year general treasury bonds in recent years, reflecting investors' strong demand for subscription, and the pricing also reflects investors' recognition of the first special treasury bonds, which is conducive to the subsequent issuance and subscription of special treasury bonds.

The 2024 government work report clearly states that starting from this year, it is planned to issue ultra-long-term special treasury bonds for several consecutive years, which will be specially used for the implementation of major national strategies and security capacity building in key areas, of which 1 trillion yuan will be issued this year.

According to the relevant arrangements for the issuance of general treasury bonds and ultra-long-term special treasury bonds in 2024 announced by the Ministry of Finance on May 13, the varieties of ultra-long-term (issuance period of more than 10 years) special treasury bonds include 20-year, 30-year and 50-year maturity. This also means that the mainland will be the first to welcome special treasury bonds with a maturity of more than 30 years, and the characteristics of "ultra-long-term" are obvious. Following the first release of the 30-year variety on May 17, other maturity varieties will also be released in the next few months.

Regarding the background of this issuance, CICC's report pointed out that in recent years, as the ability and willingness of mainland enterprises and residential sectors to increase leverage have weakened, the necessity and importance of government departments to increase leverage to support the economy and boost demand have gradually increased. Since the second half of last year, in the context of local government bonds, the policy trend of the central government taking over local governments to increase leverage has also emerged.

According to the report, one of the reasons for choosing special treasury bonds may be that they can replace local government special bonds that are also included in the budget management of government funds to a certain extent, which is expected to reduce the burden of local fiscal expenditure while promoting local economic development, and help resolve local debt risks by promoting stability.

On the one hand, the emphasis on ultra-long maturity is due to the fact that the short-term capital return of projects tends to decrease during the shift stage of economic growth, and the extension of the maturity of special treasury bonds can alleviate the pressure of short- and medium-term debt repayment. On the other hand, in the stage of economic structural transformation, the capital return cycle of basic major projects is extended, and ultra-long-term financing can better match the project cycle.

"After years of development, the mainland bond market, including the ultra-long-term treasury bond market, has expanded, providing a certain market foundation for the market-oriented issuance of ultra-long-term special treasury bonds." Chen Jianheng said.

According to the statement of the National Development and Reform Commission in April, the ultra-long-term special treasury bonds will focus on "high-level scientific and technological self-reliance and self-reliance, promoting the integrated development of urban and rural areas, promoting regional coordinated development, improving the security of food and energy resources, promoting high-quality population development, and comprehensively promoting the construction of a beautiful China".

"The issuance of ultra-long-term special treasury bonds for several consecutive years starting this year is a major strategic measure launched by the central authorities in view of the opportunities and challenges facing the mainland's economic development in the coming period, and its significance and impact are very far-reaching." Lian Ping, president and chief economist of Guangkai Chief Industry Research Institute, analyzed in the report that the issuance of ultra-long-term special treasury bonds has three significance, one is to help promote the expansion of domestic demand and economic growth, the other is to help promote the long-term high-quality development of China's economy, and the third is to help promote local fiscal recuperation.

Available for purchase by individual investors

On the day of the issuance of the first ultra-long-term special treasury bonds, the Ministry of Finance issued a document on its official website entitled "Questions and Answers on the Purchase of Treasury Bonds by Individual Investors" (hereinafter referred to as the "Questions and Answers") to popularize science for individual investors. It is clarified that the specific purchase of ultra-long-term special treasury bonds issued this year shall be handled in accordance with the book-entry treasury bond purchase process.

According to this reporter's understanding, since the beginning of this year, several savings treasury bonds issued by the Ministry of Finance, as well as local bonds sold by some local banks to individual investors over the counter for the first time, have all been snapped up, and the situation of "difficulty in finding a single debt" is even worse than in the past. Many ordinary individual investors are also paying close attention to the issuance of ultra-long-term special treasury bonds, and are concerned about whether they can participate in the purchase, how to buy it, and what the risk and return are.

According to the Q&A, treasury bonds can be divided into two categories: savings treasury bonds and book-entry treasury bonds. Among them, savings treasury bonds are sold directly to individuals, and can be divided into voucher savings treasury bonds and electronic savings treasury bonds according to different ways of recording creditor's rights.

Book-entry treasury bonds are mainly issued to institutional investors in the primary market through book-entry treasury bond underwriting syndicates, and the claims are recorded in the form of electronic bookkeeping in the Central Clearing Company. After listing, individual investors can also buy from institutional investors in the secondary market.

For book-entry treasury bonds, individual investors can purchase them through the counter of the counter business establishment institution of the national inter-bank bond market (hereinafter referred to as the "establishment institution"), online banking or mobile banking, or through the branch or APP of a securities company that conducts bond brokerage business on the stock exchange. It is understood that at present, 30 commercial banks across the country have opened over-the-counter bond business.

Specifically, individual investors can open personal bond accounts and capital accounts in advance through the counter of any branch of the institution, online banking or mobile banking, and open book-entry treasury bond trading business; You can also open an ordinary A-share securities account and a capital account in a securities company in advance.

From the perspective of income, at present, the interest rates of 3-year and 5-year time deposits (after the preferential increase) of major state-owned banks and joint-stock banks have dropped to 2.6% or even below 2.4%, and the floating points of each bank are slightly different. The annual coupon rates of the latest 3-year and 5-year savings bonds are 2.38% and 2.5% respectively. A Beijing resident told reporters that if the yield on ultra-long-term special treasury bonds is higher, they will consider buying a certain amount to lock in long-term returns.

However, compared with savings bonds, book-entry bonds are more unfamiliar to individual investors. The Q&A points out that for individual investors, they can obtain stable principal and interest income by purchasing savings treasury bonds and book-entry treasury bonds if they are held to maturity. The main difference between the two is that savings treasury bonds cannot be listed and traded during the duration period, while book-entry treasury bonds can be traded in the market during the duration period. The trading price of book-entry treasury bonds fluctuates with market conditions, and investors may gain trading income due to rising prices after buying, or they may face the risk of losses due to falling prices. Therefore, individual investors in book-entry treasury bonds should have certain investment experience and risk-taking ability for the purpose of trading profits rather than holding them to maturity.

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 (hereinafter referred to as the "Circular") to further expand the types of over-the-counter bond investment and optimize the relevant institutional arrangements to facilitate the bond investment of residents and other institutional investors, increase residents' property income, and accelerate the development of the multi-level bond market.

It is understood that the savings treasury bonds currently on sale on the mainland include two maturity varieties: three-year and five-year. Book-entry treasury bonds cover all 13 maturities mentioned above, including short-term, key maturity and ultra-long-term. The over-the-counter business start-up institutions that provide over-the-counter bond business services to individuals and enterprises are mainly treasury bonds, local government bonds and policy financial bonds.

Banks are collecting the willingness of ordinary investors to buy

Looking back on the past, the mainland issued special treasury bonds in 1998 (to supplement the capital of the four major banks), in 2007 (to purchase foreign exchange as the capital for the establishment of CIC), and in 2020 (to fight the epidemic special treasury bonds), in the form of directional issuance, directional + market-oriented combination, market-oriented issuance, and partial continuation of the 2007 special treasury bonds in 2017 and 2022, but the maturity did not exceed 30 years.

Lian Ping pointed out that 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 enterprise investors to subscribe. In order to promote the smooth issuance of this round of ultra-long-term special treasury bonds, it is suggested that the issuance of ultra-long-term special treasury bonds to institutions and individuals should be considered at the same time. Of course, the target of the issuance of specific bond batches can be appropriately focused on and distinguished.

"There is no clear notice [if] it is for individuals right now." This is the most common response that this reporter heard as an investor in a number of large state-owned banks and joint-stock bank outlets. Some account managers of individual joint-stock banks also made it clear that they are still uncertain whether ultra-long-term special treasury bonds will be sold to individual investors, "but our bank has made it clear that it will not participate in this sale." ”

According to the plan, the tender for the current treasury bonds will end until May 20, 2024 for distribution, and the company will be listed for trading on May 22. The account manager of a large state-owned bank told reporters that the notice received at present is only to prepare for the distribution on the 20th, requiring the collection and understanding of individual customers' purchase intentions, but at present, the demand enthusiasm is not high. "If it is a sale, it is expected that at least one day's notice will be given in advance, and some preparations will be made." An account manager of a large bank in Beijing said.

Since 2002, in order to increase the channels for individuals and enterprises to purchase treasury bonds, the central bank, in conjunction with relevant departments, has promulgated rules for the management of over-the-counter bond business and gradually expanded the scope of bonds. The above-mentioned Circular further clarifies the types and trading methods of over-the-counter business, i.e., various types of bonds traded and circulated in the inter-bank bond market can be invested and traded over the counter on the premise of complying with the suitability requirements of investors.

However, the reporter found in the consultation and understanding that because the treasury bonds sold to individual investors at the counter of the outlets were mainly savings treasury bonds with a maturity of 5 years or less, and there were fewer book-entry treasury bonds sold through the counter, and the treasury bonds with a term of up to 30 years were not sold to individual investors, the bank staff was not familiar with the classification and characteristics of each type of bonds, the specific purpose, and the purchase process.

On the whole, despite factors such as the undetermined sales arrangement, bank staff are generally cautious about individual purchases of ultra-long-term special treasury bonds, suggesting that such treasury bonds are more suitable for institutional investors, based on the risk of price fluctuations caused by the listing and trading of book-entry treasury bonds and the increased uncertainty of the long maturity period.

"If you really plan to hold it for 30 years, it's actually not as cost-effective as whole life insurance, and now the contract predetermined interest rate is 3%, and there is a certain insurance function." Several account managers expressed similar advice. Some individual account managers revealed that the company has set up strict and cautious sales tactics for the proposed sales, requiring full reminders of risks, and strictly following the counter requirements for audio and video recording. Another account manager said that if individual investors (allowed) buy, they need to have a risk appetite assessment level of stable or above.

(This article is from Yicai)