JINAN, March 27 (Xinhua) -- East China's Shandong Province on Wednesday issued a 1 billion yuan (149 million U.S. dollars) local government bond over the counter at commercial banks for the first time to smaller investors.

Individual and small- and medium-sized institutional investors can buy the bond via the channels of Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of China between Thursday and next Monday. The purchase threshold is 100 yuan, according to the provincial department of finance.

The land reserve bond has a maturity of three years and pays a 3.01 percent coupon rate.

The actual returns are higher as the investors are exempt from income and value-added taxes, according to the department.

Shandong is among several regions nationwide to pilot the government bond issuance over the counter at commercial banks to smaller investors starting this week.

The Ministry of Finance said Monday that the move was to broaden the channels for local government bond issuance and meet the investment needs of individuals as well as small- and medium-sized enterprises.

Previously, local government bonds were only sold and traded on the interbank bond market and on domestic stock exchanges. The investors mainly include banks, securities firms and fund management companies.

China's local governments ramped up bond issuance in the first two months of the year to ensure enough funding for major projects and stabilize investment.