(Yicai Global) June 16 -- China will officially start issuing its high-profile anti-pandemic special government bonds this week. The funds raised will go to finance public health infrastructure as well as control and prevention of the Covid-19 pandemic.

The first batch, to be sold on June 18, will consist of 5-year debt worth CNY50 billion (USD7.1 billion) and 7-year debt worth the same, the finance ministry said yesterday.

“People used to worry that issuing too many government bonds would have a big impact on the market, Mao Jie, a professor at the University of International Business and Economics, told Yicai Global. But the size of the first batch won’t “cast a great influence on the market.”

But this is onjusty the beginning of this year’s special bond issuance, whose total value is expected to reach CNY1 trillion (USD141.3 billion), another insider told Yicai Global, adding that the remaining CNY900 billion will probably be completed in the next month or two. The tenure of future offerings will mainly be 10 years.

The People’s Bank of China, the country’s central bank, is expected to inject sufficient liquidity through open-market operations and other measures to ease the impact of the large-scale issuance of new debt on the bond market, accordng to insiders.

Anti-pandemic government bonds are a kind of special national debt issued by the central government in response to the impact of the Covid-19 outbreak on local economies. Unlike ordinary government bonds, they will not be included in China’s fiscal deficit, but will still be counted in the government’s debt balance quota.

The finance ministry will bear all interest on the bonds, Hu Hengsong, assistant to the general manager at Caida Securities told Yicai Global, adding that the local and central governments will assume 30 percent and 70 percent of principal repayment liability. Local authorities can also keep a portion of the funds for independent allocation and use, not necessarily for relevant projects.

Editors: Tang Shihua, Peter Thomas