China to finance state investment company through special treasury bonds

BEIJING -- China's Ministry of Finance said on Wednesday it would use all the forex purchased with returns from a 600 billion-yuan (67.79 billion U.S. dollars) special treasury bond sale to finance the China Investment Co. Ltd.

The ministry began to sell the 10-year bonds at a coupon of 4.3percent in the inter-bank market on Wednesday, said a statement of the ministry.

The bond sale was in the first tranche of 1.55 trillion yuan basket of special treasury bonds, the rest of which would be sold with a maturity of 15 years or longer, said an official with the ministry.

He said the ministry could adopt open-market operations to purchase forex through bond sales by selling the bonds to commercial banks which would later sell them to the central bank.

According to the official, the central bank would sell an amount of forex equivalent to 600 million yuan in order to buy the special treasury bonds from commercial banks.

The bond sale would