China's Ministry of Finance will issue 40 billion
yuan ($5 billion) in treasury bonds from April 1 to fund infrastructure projects
and supplement budgetary demands, it said in a statement seen on Monday.
The bonds would be issued in two tranches: 28 billion yuan in three-year
bonds with an annual coupon of 3.14 percent; and 12 billion yuan in five-year
bonds with a coupon of 3.49 yuan.
The coupons would be lower than the 3.24 percent for three-year bank deposits
and 3.60 percent for five-year deposits, but investors need not pay the 20
percent in income taxes levied on bank savings.
The bonds would be sold to domestic investors from April 1 to April 30 by 37
banks including Bank of China and China Construction Bank Corp, according
to the statement published by the ministry's website (www.mof.gov.cn).
The batch of treasury debt will be the fifth that China has issued since the
beginning of this year and will bring the total state debt issued since Jan. 1
to 200 billion yuan.
China's treasury debt issues have racked up
successive highs in each of the past few years as Beijing has covered budgetary
deficits, bankrolled infrastructure projects, doled out aid to millions of
laid-off workers and geared up for the 2008 Olympics.
It issued a record 704.2 billion yuan in such debt last year, beating the
previous peak of 692.4 billion yuan set in 2004.
Beijing has said that from this year it will decide the volume of debt
issuances on the basis of the stock of debt already outstanding.
Its previous policy was set annual quotas for the issuance each year on the
basis of budgetary needs, without considering the outstanding treasury debt.
The finance ministry has said it expects outstanding treasury debt to reach
3.56 trillion yuan by the end of 2006, up nearly 300 billion yuan from the end
of 2005.
To that end, it will in 2006 issue 800 billion yuan in treasury debt that
will expire in 2007 or after, excluding short-term bills issued, it has said.
Earlier this month the ministry said outstanding treasury debt stood at 3.26
trillion yuan in 2005. That was equal to nearly 18 percent of the country's 2005
gross domestic product of 18.23 trillion yuan, well below the level of most
major economies.
But it was much higher than the 2.71 trillion yuan that media had previously
reported.