China Sells 32 Billion Yuan of 15-Year Bonds to Banks at 4.55%

Sept. 28 (Bloomberg) -- China sold 32 billion yuan ($4.3 billion) of 15-year bonds, the third offering of the securities to the market, to raise funds for the country's reserves management agency.

The debt was auctioned at a coupon of 4.55 percent, according to traders at China Construction Bank Corp. and the Agricultural Bank of China, who are both primary dealers obliged to bid at government bond sales. The highest bids were 4.59 percent. The coupon compares with the 4.63 percent median estimate in a Bloomberg News survey of six finance companies.

The government has now sold about 100 billion yuan of the debt to dealers and 600 billion yuan to the central bank as part of 1.55 trillion yuan planned by the end of this year.

China's lawmakers approved a plan in June to sell the so- called special government bonds to finance the investment fund, whose directive is to use the proceeds to boost returns on the country's $1.33 trillion of currency reserves.

The central bank is using the 600 billion yuan of the bonds to help control money supply through its open market operations, as it strives to reduce funds in the system that have driven inflation to the fastest in a decade and economic growth to the best in 12 years in the second quarter.

In the previous two sales, the ministry sold 32 billion yuan in 15-year bonds Sept. 17 and 35 billion yuan in 10-year notes Sept. 21. The bonds were sold at par value for 100 yuan face amount and dealers bid on the coupon rate.

The state-owned investment firm will be inaugurated Sept. 29 in Beijing.

China's local currency bonds have slumped 2.75 percent this year, the worst performers among 10 Asian debt indexes compiled by HSBC Holdings Plc.