(Yicai) March 11 -- The first certificated savings bonds issued by China’s finance ministry this year sold out quickly in Beijing, with the five-year notes proving the most popular, as falling deposit rates and a dearth of medium- and long-term fixed deposit products boosted investor demand.

The savings bonds sold out in seconds, staff at multiple bank branches in the capital told Yicai. Investors who favor government bonds had gone several months without a new issuance, which helped drive especially strong demand, according to an employee at a state-owned lender.

The issuance period for this year’s first and second tranches of certificated savings bonds -- in the amount of as much as CNY15 billion (USD2.2 billion) each -- started yesterday and runs to March 19, the finance ministry said on March 5. The first tranche consists of three-year bonds offering a 1.63 percent coupon, while the second comprises five-year bonds with a 1.7 percent coupon.

Unlike electronic savings bonds that are bought online, certificated savings bonds can only be purchased at bank counters. Some buyers lined up in the early morning to buy the savings bonds due to the limited quota, while others even brought stools the night before to secure good spots, the staffer noted, adding that the majority of them were elderly people.

As deposit rates fall and banks step up their efforts to pare liability costs, the “value for money” represented by savings bonds compared with fixed-term deposits at big state lenders has become even more pronounced. Even so, middle-aged and elderly investors remain the primary buyers of savings bonds.

This pattern reflects both investors’ personal financial preferences and the broader trend in fixed deposit rates, according to banking industry insiders. Many of the individuals who buy savings bonds are the same people who typically prefer stable savings products such as fixed term deposits, bank staff pointed out.

The upper rate on a three-year fixed deposit at big state lenders is 1.55 percent. Some five-year fixed deposits only offer 1.3 percent, while a small number of specialized products can reach up to 1.6 percent for a five-year term. Some joint-stock banks still offer fixed rates that remain more competitive than savings bonds.

Editor: Futura Costaglione