30-Year Auction On The Slate

China's MOF will today sell CNY 3bn of 30-year upsized bonds, issue 2020-12, results due after 0235GMT/1035HKT.

The MOF last sold 30-year debt on January 15, the sale drew an average yield of 3.7184%, the sale was covered 2.69 times, while cover at high yield was 1.82.

• Recently, China's longer term bond sales have performed well, a 50-year sale last week saw bid/cover of 3.28, while a 10-year sale saw cover of 4.723. The relatively small auction size today could also help support demand.
• HSBC maintain a buy recommendation for 30-year debt: "Besides the underlying macro assumptions, our preference for CGB duration exposure is due to our expectation of lower local government bond (LGB) duration supply this year. The Ministry of Finance has instructed local governments to reduce the duration of their general purpose LGB issuance and to ensure that the duration of their special purpose LGB issuance matches the length of the associated projects. We should also see better CGB-LGB issuance coordination this year compared with 2020, as local governments are now required to submit their quarterly LGB issuance plan to the MoF for pre-approval."