China auctions first 50-year bonds

15:18, November 27, 2009      

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The Ministry of Finance auctioned its 50-year treasury bonds worth 20 billion yuan ($2.93 billion) Friday, but the bid yield was 4.3 percent, lower than previous market expectations.

This is the longest term for bonds that the Chinese government has issued so far.

According to the ministry's previous statement, the bonds sold this time were issued via the inter-bank bond market and stock exchanges.

After the auction, the bonds will be issued between November 30 and December 2 and begin secondary market trading on December 4.

But the 4.3 percent bid yield falls short of previous estimates. A Bloomberg survey of analysts predicted a median estimate of 4.5 percent.

Also, a Reuters poll of 11 traders and analysts from commercial banks, insurers and securities brokerages forecasted the yield for the bond would be about 4.4 percent, or ranging from 4.3 to 4.5 percent.

China's 50-year government bond signals that the government will most likely to resort to fiscal policies rather than monetary policies to fend off possible inflation next year, analysts said earlier.

"Insurers face increasing pressure to invest their growing premium revenue, as their debt purchases in the first 10 months were much less than the annual amount in the past five years," said Chen Jianheng, a bond analyst at China International Capital Corp.

Source: Global Times
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