SHANGHAI/BEIJING (Reuters) – China’s Finance Ministry said on Monday it will start selling long-awaited special long-term government bonds this week, which the government hopes will help stimulate key sectors of the struggling economy.
The Finance Ministry said the 1 trillion yuan ($138.23 billion) special bond will have a remaining term of 20 to 50 years and will be issued on May 17, four sources familiar with the matter told Reuters earlier on Monday. I confirmed what he said.
According to a source with direct knowledge of the plan, 300 billion yuan of 20-year bonds, 600 billion yuan of 30-year bonds and 100 billion yuan of 50-year bonds will be issued.
Chinese Premier Li Qiang on Monday urged officials to make better use of ultra-long-term special bonds to help implement key national strategies and build security capabilities in key areas, state media reported.
According to state media, China will make cooperative arrangements for major tasks this year and in the coming years, and will coordinate and take advantage of conventional and unconventional policies. The country will also improve coordination of government investment and social capital, the report said, citing Mr Lee, who chaired the virtual meeting.
Market participants have been waiting for weeks for details on the issuance pipeline for these special bonds, which were first announced at the Chinese National Assembly in March.
The issuance had been expected, and bond yields fell slightly on news of the details. The yield on the 30-year Treasury note fell 2 basis points to 2.55%. It has fallen 30 basis points this year.
Zou Wang, investment director at Shanghai Anfang Private Fund Management, said the supply of such bonds was priced in, although it was negative for prices.
“Moreover, the market now expects central banks to provide liquidity support through lower interest rates and reserve requirements,” he said.
The Ministry of Finance announced that the 30-year special bond will be sold in 12 installments from May 17th to November 15th. It was announced that the 20-year bond will be sold in seven installments starting May 24, and the 50-year bond will be sold in three installments. Tranche from May 17th.
The timeline details come shortly after data showed China’s new bank lending fell month-on-month in April, more than market participants expected, as broad-based credit growth hit an all-time low. Announced.
Growth in outstanding social loans (TSF), a broad measure of credit and liquidity in the economy, hit a record low of 8.3% in April, down from 8.7% in March.
China’s economy grew at a faster-than-expected 5.3% in the first quarter, providing some relief to officials grappling with a real estate downturn and trying to reduce local government debt. But indicators show domestic demand remains fragile, weighing on overall momentum.
State media said the funds raised from the special bond will help rebuild disaster-stricken areas in the country and improve urban drainage prevention infrastructure to make China more resilient to natural disasters.
The Financial Times reported on the same day that Chinese authorities have launched a plan to sell long-term bonds, with the People’s Bank of China seeking advice from brokers on pricing. (1 dollar = 7.2341 Chinese yuan)
(Reporting by China Newsroom; Editing by Vidya Ranganathan, Christopher Cushing and Alex Richardson)