Third 2026 Tranche
The Ministry of Finance completed the third ultra-long special bond issuance of 2026 on August 5, placing another 730 billion yuan in 30-year fixed-rate bonds at a coupon of 2.23%. The bond carries the same rate as prior 2026 tranches, reflecting stable market demand and low long-end borrowing costs. Year-to-date ultra-long special bond issuance through this tranche totals approximately 250 billion yuan.
Fiscal Muscle
Ultra-long special bonds are a core fiscal instrument for funding major national projects — including high-speed rail, water infrastructure and new-type urbanisation — without adding to local government debt at the sub-national level. The instruments have become especially important as land sales revenue fell 31.5% year-on-year in H1 2026, reducing a key revenue source for local authorities.
Fiscal-Monetary Coordination
The issuance comes as the PBOC has pledged to maintain a moderately loose monetary stance, ensuring that government borrowing costs remain low. Low inflation — CPI at 0.5% in July, PPI moderating to 3.5% — gives the PBOC room to keep rates anchored, complementing fiscal expansion.
Economists estimate that each 100 billion yuan in special bond proceeds can add 0.05 to 0.1 percentage points to annual GDP growth through construction multiplier effects. With 250 billion yuan already placed and more issuances expected, the fiscal impulse could contribute 0.3 to 0.5 percentage points to 2026 GDP growth — a meaningful offset to property sector headwinds.