Financial Services Association, May 24 (Reporter Cao Yunyi) Today, 20-year ultra-long-term special treasury bonds were issued for the first time. The total face value of competitive tenders was 40 billion yuan. The current treasury bond was distributed until May 27, and the listing transaction began on May 29.

How are the ultra-long-term special treasury bonds scheduled to be issued this year expected to have on the financial side? Industry experts told the Financial Federation reporter that the current ultra-long-term treasury bonds have the characteristics of a long issuance window and a relatively small single issuance volume, and have little impact on liquidity in a short period of time.

This week is the tax period, and the central bank has achieved zero investment and zero return. The industry believes that the current volume of reverse repurchase operations by the People's Bank of China is low, there is sufficient policy space, and the price of capital has maintained a rebound trend over various periods during the tax period.

The impact of the issuance of ultra-long-term treasury bonds on liquidity is limited

Today, a 20-year ultra-long-term special treasury bond was officially issued for the first time. This is not only the first time that the Beijing Stock Exchange has served the issuance of special treasury bonds, but also the first time that China has issued a special treasury bond with a period of 20 years. According to the issuance schedule, out of the 1 trillion yuan ultra-long-term special treasury bonds, the 20-year term is planned to be issued 7 times, once a month from May to November. The total amount of 20-year ultra-long-term special treasury bonds issued this time was 40 billion yuan. The coupon interest rate was determined after passing a competitive tender from the underwriting group on the morning of May 24. Interest will be accrued starting May 25, and interest will be paid every six months. The tender for the current treasury bonds ended on May 27 and will be listed and traded on May 29.

The industry said that the issuance of 20-year treasury bonds will help build a more complete treasury bond yield curve, perform the pricing benchmark function, improve the interest rate transmission mechanism, and improve the quality and efficiency of the bond market serving the real economy.

Will the issuance of 30-year and 20-year ultra-long-term special treasury bonds in May disrupt liquidity in the second half of the month? In response, Cheng Zilong, a macro researcher at Societe Generale Research Company, told the Finance Association reporter that the current ultra-long-term treasury bonds have the characteristics of a long issuance window and a relatively small single issuance volume, and have little impact on liquidity in a short period of time.

“Judging from monetary policy operations, the current volume of reverse repurchase operations by the People's Bank of China is low, and there is plenty of policy space. Judging from institutional behavior, after stopping manual interest payments, the non-bank system had plenty of liquidity, the capital gap was small, and overseas institutions were more willing to allocate NCDs. Interest rates on interbank deposits were at a low level, and market liquidity was abundant.” Cheng Zilong said that from a comprehensive perspective, the impact of short-term ultra-long-term treasury bonds on liquidity may be limited.

“The issuance period for ultra-long-term special treasury bonds this year was 7 months. The total number of issues was 22, with an average issuance scale of 45.5 billion yuan per instalment. Compared to previous years, this year's release pace is relatively slower, and the average supply impact of a single issue is smaller.” The CICC fixed income research team believes that the issuance arrangement for this round of ultra-long-term special treasury bonds has minimized liquidity shocks and market impact.

Feng Lin, director of Dongfang Jincheng's research and development department, also said that the issuance cycle for ultra-long-term special treasury bonds this year is relatively long, and the pace is relatively slow, which has smoothed out the supply pressure that their issuance may have on the bond market. In addition, the market has long anticipated the supply pressure that may be caused by ultra-long-term special treasury bonds, so the incremental negative impact of subsequent issuance on the bond market will be relatively limited.

Funding is stable during the tax period, and monthly liquidity is expected to remain relaxed

The central bank launched a 2 billion yuan 7-day reverse repurchase operation today. Since a 7-day reverse repurchase of 2 billion yuan expired today, it achieved zero investment and zero returns on the same day. A total of 10 billion yuan reverse repurchase operations were launched this week. Since a total of 10 billion yuan of reverse repurchases expired this week, zero investment and zero returns were achieved this week.

In the current situation where the banking system's financing volume is low, this week also ushered in a tax period. The tax period ends on the 22nd of this month, and payments for the 23-24 tax period are still stable and relaxed.

Yesterday, the Shanghai Interbank Offered Rate (Shibor) declined slightly overall. Specifically, overnight Shibor fell 1.00 bps to 1.7690%; 7-day Shibor fell 0.90 bps to 1.8290%; 14-day Shibor fell 1.80 bps to 1.9190%. In the interbank pledged repurchase market, interest rates for various types also declined slightly. The weighted average interest rates for DR001 and R001 declined by 0.7 BP and 1.0 BP, respectively, to 1.7724% and 1.8079%.

“The central bank's low-volume operation maintains reasonable and abundant liquidity. During the tax period, capital prices maintained a rebound trend, but the overall capital supply in the market continued to be replenished, and the financing needs of various institutions were still easy to meet. In the future, we will continue to pay attention to the central bank's open market operations and the financial situation of major banks.” The Sanxiang Bank research team said.

Other financial disturbances also had little impact. The net payment of government debt this week was 203.46 billion yuan, slightly lower than the previous week's 206.03 billion yuan, which had little impact on capital. In addition, interbank deposits matured at 654.6 billion yuan this week, down from 7,383 yuan the previous week, and the maturity pressure has eased somewhat.

Previously, the industry expected that local government bonds would accelerate in May, and the central bank may first provide liquidity support by lowering regulations in the second and third quarter in order to create a good liquidity environment. However, judging from the current loose funding situation, the possibility and necessity of downgrading has been drastically reduced.

“Judging from the impact on capital, the short-term impact of the decentralized issuance of ultra-long-term special treasury bonds on liquidity will be much lower than expected, and the probability that the central bank will implement a downgrade as a result will also be reduced, or more to calm capital fluctuations through medium-term lending facilities (MLF) and net investment in open market operations (OMO).” Wen Bin, chief economist at Minsheng Bank, said that judging from the estimated net financing amount of government bonds, the liquidity pressure from May to October was fair. The central bank may downgrade from November to December due to the low maturity of treasury bonds and relatively high liquidity pressure.