China Is Offering Long-Term Bonds Worth $140 Billion to Stimulate Economy

By Trisha Andrada

May 13, 2024 02:50 AM EDT

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Fitch Ratings has downgraded the outlook on China's sovereign credit rating from stable to negative.
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China is increasing expenditure to bolster the economy with its plans to issue long-dated bonds worth 1 trillion Chinese Yuan or around $138 billion.

Issuance of 30-Year Bonds to Commence This Week

notification from the Ministry of Finance reported by Bloomberg indicates that the central government will commence the issuance of 30-year bonds on Friday, May 17. Bonds with tenors of 20 and 50 years will be offered on May 24 and June 14, respectively. The last round of 30-year notes will be available for purchase in November.

People's Bank of China has reportedly sought assistance from brokers over the price of the first batch of sovereign bonds, two sources familiar with the matter told the Financial Times.

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Long-Term Bonds Expected to Bolster Economic Momentum

The Chinese government announced plans to sell bonds at the legislature's annual session in March, as reported by the South China Morning Post. According to the government, the sale will bolster economic momentum in the second quarter and support investment in important regions.

Liu Sushe, deputy chairman of the National Development and Reform Commission, said in a public briefing in mid-April that the bond sale is an important component of coordinated efforts to fund large-scale, time-sensitive, and challenging projects necessary for the economy's modernization.

Premier Li Qiang also announced this year that more long-term bonds would be issued to boost food security, energy, and the industrial supply chain.

The sale follows an influx of long-dated sovereign bonds into the Chinese market in the first quarter, which caused the cost of government borrowing to hit record lows. Regional banks in China decided to escape the unpredictability of the country's equity and real estate markets.

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