Retail sales of local government bonds attract eager investors

Chinese local government bonds worth 1.4 billion yuan ($208.5 million) were snapped up by retail investors within a single day, after counter sales in banks were made available for the first time. The fundraising will help supplement a broader fiscal deficit this year, analysts said.

On Monday, individuals in China were able to purchase bonds issued by the Zhejiang provincial government (five-year term, 3.32 percent coupon rate) and the Ningbo city government (three-year term, 3.04 percent coupon rate). Proceeds from the sales will be used for land purchases (300 million yuan) and shantytown renovations (1.1 billion yuan), according to a notice on the website of China Central Depository and Clearing, a clearinghouse under the central bank.

The minimum investment amount for retail investors is 100 yuan, lower than most wealth management products issued by commercial banks. Previously, individual investors could only purchase bonds issued by the central government, known as treasury bonds. And before Monday, local government bonds were traded mainly in the interbank market.