China will start selling the first batch of a planned 1 trillion yuan ($138.37 billion) ultralong bond issuance this week, as Beijing looks to provide more support to the economy.
The sale will run from May to November, with an unspecified amount of special 30-year treasurys to be issued Friday, according to a post on Chinese finance ministry's website. Bonds in 20- and 50-year tenors will be sold starting May 24 and June 14 respectively.
Chinese Premier Li Qiang announced the bond sale plan in a March report and said Beijing might continue to conduct sales for several years to raise funds to support mega projects and strategic sectors.
In the same report, Li announced a 2024 economic growth target of around 5%, a goal which economists have called ambitious, which may help explain why Beijing turned to special treasury bonds to spur growth for only the fourth time in the past quarter-century.
Monday's bond announcement came after news over the weekend that a broad measure of China's credit in April unexpectedly fell for the first time since 2005.
It also came after China's Politburo meeting last month, where leaders pledged to speed up government bond issuance and hinted that interest rates and banks' cash reserve requirements could be cut.
The issuance of the special treasury bonds was widely expected though it came a little earlier than forecast, said Becky Liu, Head of China Macro Strategy at Standard Chartered.
Liu thinks there is a growing possibility of additional monetary policy easing in the near term, regardless of whether the U.S. Federal Reserve cuts its rates. A cut on Chinese banks' reserve ratio requirements could be announced when the special bonds are issued, to help smoothen their sales, Liu said.
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