BEIJING -- China's upcoming issuance of special government bonds for COVID-19 control will have a limited impact on market liquidity and bond prices, analysts said.

China will issue the first three batches of special government bonds totaling 170 billion yuan (about $24 billion) to raise funds for coordinating epidemic control and economic development, the Ministry of Finance said Tuesday.

The first two batches of 50 billion yuan of five-year bonds and 50 billion yuan of seven-year bonds will be listed and traded on June 23, while the third batch of 10-year bonds will become tradable on June 30, according to statements on the ministry's website.

Following the announcement, spot prices of bonds plunged while treasury yields climbed.

Although large-scale government bond issuances inevitably squeeze market liquidity and raise borrowing costs, the impact will be limited, analysts said.

Local governments may take into account the special bond issuance and delay some of their own fundraising via bonds, effectively easing their liquidity pressure, said Ming Ming, an analyst with CITIC Securities.

In the meantime, the central bank has stepped up open market operations recently, hinting at an easing bias that will relieve some of the pressure, he noted.

Zhang Xu, an analyst with Everbright Securities, said some of the funds raised via previous government bond issuances will be spent in June and July, adding to market liquidity.

China will pursue a more proactive and impactful fiscal policy, setting its fiscal deficit above 3.6 percent of GDP and issuing 1 trillion yuan of government bonds for COVID-19 control this year to release more funds for companies and individuals.

The overnight Shanghai Interbank Offered Rate, which measures the borrowing cost of China's interbank market, rose by 29.7 basis points to 2.048 percent Wednesday.