For China’s wary investors, the name of the game is bonds – long-term bonds – and they’re playing it safe to win

As the first batches of a trillion-yuan offering of ultra-long-term special government bonds came roaring out of the gate this week, those bearish on China’s economic outlook triggered a feeding frenzy

Full offering will be released in incremental sales this year, and local governments eyeing economy-boosting projects are gearing up to make contentious claims for cash

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Amanda Leein Hong KongandHe Huifengin Guangdong

Published: 9:00pm, 24 May 2024

A rush of interest in China’s rarely offered ultra-long-term special government bonds appears to reflect investors’ appetite for safe-haven assets as they hunker down amid uncertain economic times.

Meanwhile, local-level governments, having become awash in growing debt pressure, are vowing to fight for a piece of what is ultimately a relatively small pie that will be used to feed economy-boosting projects across the country.

The appeal of these special long-term treasury bonds – part of a trillion-yuan (US$138 billion) offering of such bonds planned for this year – is so great that when the first batch of 30-year bonds began trading on Wednesday, the value surged by more than 20 per cent in both the Shanghai and Shenzhen stock exchanges, triggering temporary suspensions.

The trading of the ultra-long special treasury bonds came after Beijing rolled out new property-support measures, with the People’s Bank of China facilitating 1 trillion yuan in extra funding and easing mortgage rules. Local governments have been asked to purchase unsold homes from developers and convert them into affordable housing.

Analysts say that the acceleration of government bond issuances could help stabilise credit growth, which also slowed sharply in April.