China plans to sell RMB 200 billion (US$26.7 billion) of special treasury bonds (T-bonds) to the market before the end of 2007, announced the Ministry of Finance (MOF). The bonds would be sold to the public with the outstanding terms of over ten years.
The first batch special T-bonds worth of RMB 100 billion will be issued before the end of this month, according the MOF. And the remaining RMB 100 billion bonds will be sold later in this year.
The bonds are the second part of the total planned RMB 1.55 trillion for the new foreign exchange investment companies in China.
The sales of the bonds will be used to buy US$200 billion foreign exchange reserves from the People’s Bank of China for building new state investment firm.
The MOF will sell 15-year special T-bonds worth of RMB 30 billion next Monday, and other 10-year bonds will be issued on Sep. 21 as well as 15-year bonds issuing on Sep. 28. The bonds issued on Monday will have semi-annual interest payments and could be traded in inter bank market on Sep. 27.
The MOF has issued RMB 600 billion of such bonds with an annual interest rate of 4.3% through the Agricultural Bank of China. About RMB 10 billion bonds were used by the central bank as collateral in a repurchase transaction last Tuesday. It is expected that the government will continue to issue such bonds as an important part of its tightening monetary policy.
According to the report of the official China Securities Journal on Monday, the state forex investment company, namely the China Investment Company, will be set up next week.
