(Yicai) March 21 -- The Chinese interbank market has completed the issuance of its first 30-year bond, as the market's ample liquidity has led to an extension in the maturity period and a decline in interest rates.

China Chengtong Holdings Group yesterday issued a CNY1 billion (USD140 million) 30-year bond with an interest rate of 3.35 percent and a CNY7 billion 15-year bond with an interest rate of 3.21 percent, the Beijing-based government investment vehicle announced on the same day.

China Chengtong is a central state-owned capital operation company with an AAA credit rating.

It is not surprising for issuers with high credit ratings like China Chengtong to attempt issuing ultra-long-term credit bonds, as they can alleviate issuers’ debt pressure while locking in low-cost funds, a credit bond market researcher told Yicai. At the same time, there is strong demand for such bonds as long-term investors, including insurance and pension funds, welcome such assets as part of their portfolio, the researcher added.

The successful issuance of the Chinese interbank market's first 30-year bond is expected to have a demonstrative effect, driving the issuance of more 30-year bond products, the researcher noted.

Ultra-long credit bonds were very popular also before China Chengtong issued its 30-year bond yesterday. Hangzhou City Construction Investment Group announced on March 15 that it completed the issuance of a CNY300 million (USD41.7 million) 20-year bond with an interest rate of 3 percent and a CNY700 million 10-year bond with an interest rate of 2.82 percent.

Hangzhou City Construction Investment, which is the largest municipal investment financing platform in Hangzhou, the capital city of China's economic powerhouse Zhejiang province, also has an AAA credit rating.

The main reason behind the decline in interest rates in the primary and secondary bond markets is the ample liquidity and expectation for continued loose monetary policies, Zhou Wenyu, deputy director of Fitch China Bohua Credit Ratings' business affairs department, told Yicai.

The issuance of ultra-long credit bonds with maturities of over seven years reached CNY143.7 billion (USD20 billion) in less than three months since the beginning of the year, accounting for 5.7 percent of the total issuance of non-financial corporate credit bonds in the period, according to data from Guosen Securities. In comparison, the annual average for the 13 years between 2011 and 2023 was CNY157.6 billion, accounting for 2.6 percent of the total, the data also showed.

Editors: Tang Shihua, Futura Costaglione