idpoker| "High-frequency small amount", what is the meaning of the Ministry of Finance in arranging the issuance of trillions of ultra-long special treasury bonds in this way?

Reporter Wang Zhen

This year, 1 trillion yuan of ultra-long-term special treasury bonds will be issued from Friday. Analysts pointed out that this round of ultra-long-term special treasury bonds has three major characteristics: ultra-long maturity, high frequency of issuance, and large time span. The long maturity of the bond is forIdpokerTo better meet the needs of long-term limited project financing, high issuance frequency and large time span can avoid the phased impact of centralized issuance on capital, and leave room for stable financial growth.

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, the 1 trillion yuan of ultra-long-term special treasury bonds planned to be issued this year can be divided into three categories: 20 years, 30 years and 50 years. Analysts pointed out that compared with the previous five special treasury bonds, the issuance period of this round of ultra-long-term special treasury bonds is particularly long.

Special treasury bonds refer to treasury bonds with clear uses when the funds are invested for specific purposes. Judging from historical experience, special treasury bonds are mostly issued when major changes take place in the macro environment, when the economy suffers major shocks, or when they are faced with great risks, and are specially used for the construction of major national strategies and key areas. or deal with public crises such as major epidemics and natural disasters. Under normal circumstances, special treasury bonds are not included in the deficit, and their income and expenditure are included in the budget of the central government fund.

The "Government work report" issued during the "two sessions" in March pointed out that the 1 trillion yuan of ultra-long-term special treasury bonds issued this year and those issued in the next few years are intended to systematically solve the funding problems of some major projects in the process of building a powerful country and national rejuvenation, and are specially used for the implementation of major national strategies and security capacity-building in key areas.

Lian Ping, president and chief economist of Guangkai Chief Industrial Research Institute, pointed out that in history, China has issued special treasury bonds five times, including three new issues (1998, 2007, 2020) and two sequels (2017 and 2022). Judging from the issuance period of previous special treasury bonds, the short one is only 3 years, the 5-10 years or so is relatively concentrated, and the longest is 30 years.

"strictly speaking, only the 30-year special treasury bonds issued in 1998 and the 15-year special treasury bonds issued in 2007 can be classified as ultra-long-term special treasury bonds, and these two issues are also in line with the purpose of 'major national strategy implementation'." Lian Ping said.

He said that the ultra-long-term period can not only provide abundant ultra-long-term funds for major projects and major projects with a long construction cycle and slow return on investment, but also dilute the interest payment pressure on treasury bonds.

Feng Lin, director of the Research and Development Department of Oriental Jincheng International Credit Evaluation Co., Ltd., also said that issuing ultra-long-term special treasury bonds can better match the financing needs of long-term limited projects, improve the efficiency of the use of funds, and enhance the financial guarantee capacity of long-term limited projects.

Lian Ping also mentioned that if 1 trillion yuan of ultra-long-term special treasury bonds are issued every year in the next 4-5 years, the final issuance scale will be as high as 4 trillion-5 trillion yuan, which will far exceed the previous special treasury bonds of 270 billion yuan-1.IdpokerThe issuance scale of .55 trillion yuan. The annual increase of 1 trillion yuan in investment and consumption is expected to boost GDP growth by an additional 0.2-0.25 percent.

The issuing rhythm of "high-frequency small" is another major feature of this ultra-long-term special treasury bonds.

According to the arrangement of the Ministry of Finance, 1 trillion yuan of ultra-long-term special treasury bonds will be issued from May to November this year. Of these, 6 were issued in the second quarter, 10 in the third quarter and 6 in the fourth quarter, totaling 22 times, with an average single issue size of about 45.5 billion yuan.

As of press time, the Ministry of Finance has not yet released the details of the issue, including the amount of each issue, the coupon rate, and the mode of issue.

Analysts said that "high-frequency small" issuance can spread the pressure on the supply of government bonds and reduce the impact on the capital side of the market.

"from the point of view of the issuance arrangements, the issuance cycle of 1 trillion yuan of special treasury bonds this year will be longer than the market expected, and the pace of issuance will be relatively slow, which will help to avoid the phased pressure on the capital caused by the centralized issuance." Feng Lin said.

Qin Han, chief fixed income analyst at Zheshang Securities, pointed out that this year, the supply of trillion yuan of ultra-long-term special treasury bonds is concentrated from June to October, of which June, August and October are the peak of supply, which is basically wrong with the tax payment period in July. only the 30-year treasury bonds issued in late October are on the same day as banks. On the whole, the supply shock is relatively controllable.

He also said that there may be four main considerations for the Ministry of Finance to extend the issuance time of trillion yuan of special treasury bonds. First, after the landing of 500 billion yuan of additional treasury bonds in 2023, 500 billion yuan of funds will be carried forward for use in 2024, and the issuance of ultra-long special treasury bonds will urgently slow down; second, to alleviate the impact on the capital surface and the carrying capacity of the bond market, the need for a subsequent reduction in the deposit reserve ratio may be reduced; third, to alleviate the restriction of insufficient project reserves on the pace of issuance; fourth, the main issuance arrangements will be concentrated in the third quarter, which may help the economy support the bottom up in the fourth quarter.