Recently, the mainland is about to issue a total of 40 billion yuan of ultra-long-term special treasury bonds, which undoubtedly provides investors with a new choice. So, what kind of investment product is this? How can we understand and grasp this investment opportunity?
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First of all, let's understand what ultra-long-term special government bonds are. Treasury bonds, as the name suggests, are bonds issued by the state borrowing. On the other hand, ultra-long-term special government bonds are government bonds with a longer maturity and are used exclusively for specific purposes. The interest rate of the 40 billion yuan ultra-long-term special treasury bonds to be issued this time will be determined after competitive bidding by an underwriting group of 56 financial institutions this morning. In terms of the principal and interest payment date, the interest on the current treasury bonds will be calculated from May 20, 2024, and the interest will be paid semi-annually, with the interest payment dates being May 20 and November 20 of each year, and the principal will be repaid and the last interest will be paid on May 20, 2054.
As a new type of investment product, ultra-long-term special treasury bonds are significantly different from the familiar savings treasury bonds. There are two main types of treasury bonds on the mainland: one is savings treasury bonds and the other is book-entry treasury bonds. Savings treasury bonds are sold by commercial banks entrusted by the Ministry of Finance, while book-entry treasury bonds are issued by the Ministry of Finance through the government bond issuance system to financial institutions for competitive bidding, and then the winning financial institutions distribute and trade in the bond market, including bank counters, stock exchange markets, etc. In simple terms, book-entry Treasury bonds are tradable financial products.
From the perspective of maturity and realization methods, there are two main types of savings bonds: 3-year and 5-year, and you can get the interest agreed on the coupon when you hold them at maturity, but they cannot be circulated and cannot be listed and traded. Book-entry treasury bonds, which do not need to be held to maturity, can be realized through market transactions, like stocks, you can buy low and sell high to earn the difference income, of course, there is also the risk of buying high and selling low to lose the principal. For book-entry treasury bonds, investors need to have a certain grasp of the market price, rise and fall, and the relationship between market interest rates in the process of buying and selling, and should have a higher risk tolerance.
So, for ultra-long-term treasury bonds, can the people buy them? It is understood that if ultra-long-term special treasury bonds are listed and circulated in the interbank counter market in the future, individual investors can buy them. Judging from the issuance and trading of special treasury bonds in history, such as the 2020 anti-epidemic special treasury bonds, they are not only listed and circulated in the interbank bond market, but also listed and circulated in the exchange market and the counter market of commercial banks, and can be purchased by individual investors.
So, what should we make of this investment opportunity? First of all, the issuance of ultra-long-term special treasury bonds is an important measure for the state to support security capacity building in major strategies and key areas. The mainland will issue 1 trillion yuan of ultra-long-term special treasury bonds, including 20-year, 30-year, and 50-year bonds, and will issue them 22 times in total. The issuance is scheduled to run from May to November, with a relatively long supply interval and a slower pace, which helps to maintain the smooth operation of the bond market.
According to the analysis of industry insiders, the issuance of ultra-long-term special treasury bonds is also conducive to balancing the supply and demand structure of ultra-long-term treasury bonds. Since the beginning of this year, non-bank institutions such as insurance, wealth management, and funds have abundant funds, and the demand for ultra-long-term treasury bonds is relatively strong. The issuance of ultra-long-term special treasury bonds will help meet the investment needs of market institutions for ultra-long-term bonds and balance the supply and demand structure of the treasury bond market.
On May 24, the mainland will also issue 20-year ultra-long-term special treasury bonds, which will help build a more complete treasury yield curve, play the role of pricing benchmark, improve the interest rate transmission mechanism, and improve the quality and efficiency of the bond market to serve the real economy. In the future, with the further improvement of the liquidity and market depth of the long-term treasury bond market, the pricing of the treasury yield curve will continue to improve, and the role of "pricing anchor" will become more prominent.
In general, the issuance of ultra-long-term special treasury bonds is not only an important measure for our country to support security capacity building in major strategies and key areas, but also provides investors with a new investment choice. In this uncertain economic environment, ultra-long-term special treasury bonds may become a new option for us to preserve and increase our wealth.