China will start selling the first batch of its 1 trillion yuan (HK$1.1 trillion) of ultra-long special sovereign bonds on Friday as it seeks to raise funds to support the world's second-biggest economy.
The central government will begin to issue some 30-year bonds on Friday, according to a notice by the Ministry of Finance.
Bonds with 20-year and 50-year tenors will be offered from May 24 and June 14, respectively.
The final batch consisting of 30-year notes will go on sale in November.
China announced plans for the bond sale during the National People's Congress in March as policymakers vowed to ramp up fiscal support for the economy. The move raised expectations that the central government is stepping up its fiscal spending amid mounting debt pressure on many local authorities.
It is only the fourth such sale in the past 26 years, with the most recent one in 2020 when authorities issued 1 trillion yuan worth of those bonds to pay for pandemic response measures.
The planned sale comes as data showed a broad credit measure in April shrinking for the first time as government bond sales slowed.
Bond sales have been accelerating in recent weeks.
Provincial governments sold the highest amount of new notes last week since February, responding to a call by top leaders to speed up local bond issuance. The 24-man Politburo also vowed in April to start the sale of special sovereign debt "at an early date."
The central debt sale will help "speed up fiscal spending, which has been slow so far," said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Bank. "An adequate implementation of the budget can help sustain the positive growth momentum in the first quarter and increase the chance of achieving 5 percent growth."
He expects the PBOC to lower banks' reserve requirement ratio to ensure ample liquidity, forecasting a 25-basis point reduction to coincide with the bond sale. This could increase the opportunity for a loan prime rate cut, he added.
The Financial Times reported earlier that the People's Bank of China has asked brokers for advice on pricing the sale of the first batch of the sovereign bonds.
The government will issue 30-year bonds this Friday. Reuters
