China's Ministry of Finance will soon kick off the sale of 500 billion yuan
($65.82 billion) in bonds, as the first batch of its planned 1.55 trillion yuan
special bonds, the China Business News reported on Thursday.
The finance ministry has submitted an application to the State Council, or
cabinet, to launch the first-tranche offer, the Shanghai-based newspaper quoted
unnamed sources as saying.
The remaining more than 1 trillion yuan bonds should be issued in two
batches, with each averaging around 500 billion yuan, according to the need of
China's new overseas investment agency, the report said.
The proceeds raised from the bond issue will be used to fund the
establishment of the investment agency, which will help invest part of China's
ballooning foreign exchange reserves in overseas markets.
The newspaper quoted an unnamed Finance Ministry official as saying the bonds
would not be issued directly to the People's Bank of China, or central bank,
although the offer would lead to an increase in the amount of bonds held by the
Similar remarks by an unnamed Finance Ministry official were also published
in the Shanghai Securities News.
The Finance Ministry official was also quoted as saying that the special bond
issue should not have a direct impact on money supply, although the central bank
can use the special bonds to gradually absorb liquidity through open market
The official also said the issue was not aimed at cooling the country's stock
market, which has fallen amid shrinking turnover in the past few days partly
because of investors' jitters that liquidity would be tightened by the issue.