China to launch trillion yuan ultra long-term bonds

China announces the issuance of 1 trillion yuan ultra long-term treasury bonds, including 20, 30, and 50-year securities. This move aims to diversify the bond market, attract long-term investors, and bolster China’s position in global finance.

China is set to introduce its first batch of ultra-long-term treasury bonds, totalling 1 trillion yuan ($140 billion), as announced by the Ministry of Finance. These bonds, featuring maturities of 20, 30, and 50 years, represent a strategic move by China to diversify its debt offerings and meet the growing demand for long-dated securities.

The issuance of the bonds reflects China’s efforts to develop its domestic bond market and provide investors with additional options for managing risk and extending their investment horizons. By offering bonds with maturities of up to 50 years, China aims to attract long-term institutional investors, such as pension funds and insurance companies, while also addressing the financing needs of infrastructure projects and other long-term investments.

The decision to launch ultra-long-term bonds comes at a time of heightened uncertainty and volatility in global financial markets, driven by factors such as geopolitical tensions, inflation concerns, and the ongoing COVID-19 pandemic. In this context, investors are increasingly seeking safe-haven assets with stable returns and longer durations to hedge against market risks and uncertainties.

The introduction of 20, 30, and 50-year securities expands the range of investment opportunities available to both domestic and international investors in China’s bond market. These longer-dated bonds offer higher yields compared to shorter-dated securities, providing investors with potential returns that match their long-term investment objectives and risk profiles. By diversifying its debt offerings and extending the yield curve, China aims to deepen liquidity, improve price discovery, and attract more foreign investment into its bond market.