The long-awaited super long-term special government bonds have been officially issued.

On the morning of May 17th, after a competitive bidding process involving 56 financial institutions, the coupon rate for the inaugural super long-term special government bond was announced. According to the Ministry of Finance's official website, the actual issuance face value of this tranche of government bonds is 40 billion yuan, with a term of 30 years. The determined coupon rate is 2.57%, with interest accruing from May 20th, 2024. Distribution will take place from the end of the bidding until May 20th, and trading will commence on May 22nd.

According to Wind (Wangdian) data, the "24 Special Government Bond 01" has a full bid multiple of 3.9 and a marginal multiple of 382.6. "The full bid multiple is moderately high, with previous government bond bid multiples mostly ranging from 2 to 3 times," noted a market participant, indicating that the first special government bond has been favored by institutional funds based on the interest rate and subscription multiples.

In the view of Dong Ximiao, Chief Researcher at China United Network Communications, against the backdrop of an "asset drought," the super long-term special government bonds have played a significant role in providing relatively safe assets for the market, perfectly meeting the needs of financial institutions such as banks and wealth management companies, and their popularity among institutions is in line with expectations.

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In addition to institutional investors, individual investors can also participate. According to the "Q&A for Individual Investors Purchasing Government Bonds" (hereinafter referred to as "Q&A") released by the Ministry of Finance on May 17th, the super long-term special government bonds issued this year are book-entry government bonds, with three maturity options of 20 years, 30 years, and 50 years, and the specific purchase procedures are handled according to the book-entry government bond purchase process.

"Book-entry government bonds are primarily issued to institutional investors in the primary market through the book-entry government bond underwriting group, and the claims are recorded electronically by the Central Depository & Clearing Company. After listing, individual investors can also purchase from institutional investors in the secondary market," the aforementioned Q&A mentioned.

Caijing learned from a customer manager at a certain joint-stock bank that the bank's super long-term special government bonds will be on sale at 10 a.m. on May 20th, and can be purchased through business outlets or mobile banking. "The interest rate is 2.57%, and only customers with a risk level of A3 (balanced, with a risk tolerance rating divided into five levels) and above can purchase."

Individual investors with a risk level of A3 and above can buy

Amid the continuous decline in the yield of various wealth management products and deposit interest rates, the situation of "one bond is hard to find" continues to unfold, and news of "sold out in seconds" and "difficult to grab" for savings government bonds has attracted market attention.It should be noted that "this national debt is not that national debt." Although both provide stable principal and interest income upon maturity, unlike savings bonds, the ultra-long-term special national bonds issued this time are book-entry bonds.

Regarding the differences between the two, the Ministry of Finance has provided a detailed explanation in the "Q&A": Savings bonds cannot be traded on the market during their existence period, while book-entry bonds can be traded in the market during their existence period. The trading price of book-entry bonds fluctuates with market conditions. Investors who buy them may gain from price increases or face the risk of losses due to price declines. Therefore, individual investors in book-entry bonds who do not aim to hold until maturity but to profit from trading should have certain investment experience and risk-bearing capacity.

A customer manager from a joint-stock bank told "Finance and Economics" that according to the regulations released by the bank on May 17, customers with a risk level of A3 and above can purchase ultra-long-term special national bonds.

According to a bank text message posted by a bank customer, the 2024 ultra-long-term special national bond (first phase) book-entry bond has a term of 30 years, a coupon rate of 2.57%, and pays interest semi-annually. It will be redeemed at par value upon maturity. Due to the ultra-long holding period, the bond price fluctuations faced when selling during the holding period will be higher than those of medium and short-term bonds.

"Generally, institutions buy more ultra-long-term bonds, and individuals buy less," said the customer manager. On the one hand, terms of 20, 30, and 50 years are too long for individuals. On the other hand, institutions can profit from flexible trading in the secondary market after purchasing, while individuals find it relatively difficult to resell.

The mobile app of the joint-stock bank shows that the current savings bond interest rate of the bank is 2.5% for a 5-year term and 2.38% for a 3-year term; while the 3-year fixed deposit interest rate is 1.95%.

According to the issuance plan, this year's ultra-long-term special national bonds have issuance terms of 20 years, 30 years, and 50 years, with issuance times of 7, 12, and 3 times, respectively, all paying interest semi-annually.

Among them, 7 issues of 20-year ultra-long-term special national bonds will be issued, with the first 2 issues and the subsequent 5 issues, starting from the issuance on May 24; 12 issues of 30-year ultra-long-term special national bonds will be issued, with the first 3 issues and the subsequent 9 issues, starting from the issuance on May 17; 3 issues of 50-year ultra-long-term special national bonds are planned to be issued, with the first issue and the subsequent 2 issues, starting from the issuance on June 14.

Included in the scope of government bond futures delivery

Looking back at history, there have been a total of five special national bond issuances. Judging from the issuance terms of the previous special national bonds, the shortest was 3 years, most were concentrated between 5 and 10 years, and the longest was 30 years. Compared to before, this year's special national bond terms are significantly longer.With the launch of the issuance of ultra-long-term special government bonds, some researchers believe it may bring certain impacts to the market. On the morning of the first issuance of the ultra-long-term special government bond, the bond market experienced significant fluctuations.

Several industry analysts have pointed out that in conjunction with the implementation of the ultra-long-term special government bonds, monetary policy will enhance its coordination with fiscal policy. Zhang Xu, Chief Fixed Income Analyst at Everbright Securities, stated that during the issuance process, monetary and fiscal policies were fully coordinated, and the People's Bank of China created a suitable liquidity environment through tools such as OMO (Open Market Operations) and MLF (Medium-term Lending Facility).

"If future factors such as government bond issuance disrupt the liquidity of the banking system, the monetary authorities may use tools like reserve requirements to maintain a reasonably ample liquidity in the banking system," Zhang Xu pointed out.

"According to historical experience, the market impact and influence are mainly before the issuance is implemented. After the issuance is in place, the focus is on whether the policies form a joint force to promote the overall macroeconomic fundamentals or further improve macroeconomic expectations," said the fixed income research team at Tianfeng Securities. They expect that, given the current macro policy orientation of seeking progress while maintaining stability, the issue of insufficient effective demand may persist for a while, and the subsequent supply impact on the bond market is expected to be within the scope of local frictions. They maintain the judgment that the 30-year government bond will be in the range of 2.4% to 2.6%.

In Dong Ximiao's view, the issuance of ultra-long-term special government bonds has three significant meanings: First, it is specifically used for the implementation of national major strategic projects and the construction of safety capabilities in key areas, solving the problem of capital shortage for major project construction, stimulating investment, expanding consumption, and helping to build a modern industrial system; Second, it optimizes the debt structure of the central and local governments, issued in the name of the central government, supporting local economic construction, which helps to reduce the leverage ratio of local governments and prevent local debt risks; Third, it sends a clear signal that fiscal policy will be more actively supportive of economic development, which helps to boost market confidence, stabilize expectations, and promote the rapid recovery and rise of the macroeconomy.

"To meet the demand for medium and long-term liquidity from the issuance of government bonds and ultra-long-term special government bonds, it is expected that the central bank may lower the reserve requirement ratio in the second quarter, providing financial institutions with long-term stable low-cost funds and creating a more suitable liquidity environment," Dong Ximiao pointed out.

It is worth mentioning that on the day of the issuance of the first ultra-long-term special government bond, the China Financial Futures Exchange clarified that the 30-year special government bonds issued in this round meet the conditions for deliverable bonds for government bond futures and will be included in the range of deliverable bonds for 30-year government bond futures, used for the physical delivery of government bond futures.

Analysis points out that this is beneficial for the members of the government bond underwriting group to use the 30-year government bond futures to manage the interest rate fluctuation risks of the ultra-long-term special government bonds, enhance the enthusiasm of the underwriting group members to subscribe to the ultra-long-term special government bonds, and promote the smooth issuance of the ultra-long-term special government bonds.