(Yicai) June 11 -- CNY50 billion (USD7 billion) of electronic Chinese government savings bonds, the first batch to be issued after interest rates were lowered again this month, sold like hot cakes, indicating that investors’ appetite for higher-yield, low-risk savings options remains undiminished.

Online quotas of the three-year and five-year bonds that were launched yesterday sold out instantly on some banks’ mobile apps, according to Yicai research. And, according to the apps, the five-year bond sold out first.

“There are no more bonds available online. You will have to try your luck at the counter,” several client managers at state-owned and joint-stock banks told a Yicai reporter posing as an investor yesterday.

Bond interest rates were trimmed 30 basis points in June from May to 1.63 percent for the three-year bond and 1.7 percent for the five-year one. Despite this reduction, they still offer a better return than fixed deposits at state-owned banks, which after the latest cut of 25 bps on May 20, now stand at 1.25 percent for a three-year term and 1.3 percent for a five-year one.

With interest rates so low, Chinese savers are finding it harder to make their money grow. Young investors are joining the older, more conservative generations in the rush to snap up bonds.

Since banks are under pressure to keep borrowing costs low, many banks face tight quotas for five-year fixed deposits with floating rates, while some have scrapped them entirely. Meanwhile, large-denomination certificates of deposit, which used to be in short supply, are not offering a much higher rate than regular deposits.

Editor: Kim Taylor