On September 18th, the provincial finance department successfully issued the eighth batch of government bonds this year on the Shanghai Stock Exchange, amounting to 8.8208 billion yuan. This total comprises 3.8608 billion yuan in new bonds and 4.96 billion yuan in refinancing bonds.
The bond maturities for this batch span 5-year, 10-year, 15-year, 20-year, and 30-year terms, with an average interest rate of 1.78% and an average bid multiple of 22.74 times. With this issuance, the province's cumulative government bond issuance has reached 161.781 billion yuan.
Since the beginning of the year, the provincial finance department has diligently implemented the directives from the provincial party committee and government regarding enhancing the quality and efficiency of local bond issuance. By executing a more proactive fiscal policy, continuously consolidating the issuance foundation and innovating issuance models, it has steadily improved the level of scientific fiscal management and deepened the synergy between fiscal and financial operations. These efforts are instrumental in supporting a stable and positive economic start for Shanxi's "15th Five-Year Plan" period.
Actively seeking guidance from the Ministry of Finance, the provincial finance department has achieved a significant milestone with the inaugural issuance of a land reserve special bond with embedded options, totaling 131 million yuan. This bond carries a 3+2 year term and a winning interest rate of 1.47%. An option-embedded bond is a bond variety that includes a redemption right within its contract terms. The provincial finance department can exercise the redemption right in the third year or opt for a single repayment of principal at maturity in the fifth year, depending on the revenue performance of the project corresponding to this bond.
The successful debut of this option-embedded bond serves two key purposes. On one hand, it has strengthened underwriting willingness among financial institutions. Compared to standard bonds, option-embedded bonds have a shorter effective duration while maintaining largely similar coupon rates, presenting a certain premium space that invigorates market allocation and trading activity, leading to sustained improvements in bond liquidity. On the other hand, it has achieved a reasonable alignment between project returns and bond maturities, effectively enhancing the efficiency of fiscal fund allocation. Through flexible arrangement of the repayment term structure, it has tangibly improved the refined management level throughout the bond duration period.
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