The Chinese government has made it possible for domestic investors to subscribe for government bonds via mobile banking apps.
The Ministry of Finance (MOF) recently announced two new bond issues – the 2021 3rd Government Savings Bond (2021年第三期储蓄国债) and the 2021 4th Government Savings Bond (2021年第四期储蓄国债).
MOF plans to raising 40 billion yuan via the issue of the two bonds, both of which are fixed rate, fixed term instruments.
The 3rd Government Savings Bond has a maturity of three years and an annual coupon rate of 3.8%, with an issuance volume of up to 20 billion yuan, while the 4th Government Savings Bond has a maturity of five years and an annual coupon rate of 3.97% with the same issuance volume
Both bonds will be issued during the period from 10 – 19 May, with interest calculations to commence on 10 May and be paid on the same date each year.
The issue will be distinguished from previous bond issues with the addition of new purchasing channel in the form of mobile banking apps.
MOF and the Chinese central bank said that domestic investors will be able to purchase the bonds via mobile banking apps provided by any one of four lenders, including China Merchants Bank, Bank of Jiangsu, Industrial and Commercial Bank of China (ICBC) and Postal Savings Bank of China (PSBC).
The move comes after MOF and the People’s Bank of China (PBOC) jointly issued the “Mobile Banking Government Savings Bond (Electronic) Trial Measures” (手机银行销售储蓄国债（电子式）试点办法) in March of this year, which outlined plans to select banks to participate in underwriting syndicates as part of the trials.
According to the Measures banks participating in the trials would handle the sale of government savings bonds via their mobile banking apps, as well as provide services including opening of personal trustee accounts for bonds and inquiries on trustee balances.
“At present the majority of the operations of China’s banks are shifting towards digital channels,” said Dong Ximiao (董希淼), chief researcher with MUCFC, to Securities Journal.
“Of these mobile banking is the most important method for off-counter transactions. Government savings bonds are highly favoured by retail investors on the wealth management market, and mobile banking provides huge convenience to investors who want to buy government savings bonds in digital form.”