Core Viewpoint - The issuance of perpetual bonds by commercial banks is accelerating, particularly among regional small and medium-sized banks, as they face significant capital replenishment pressures in the second half of the year [1][4]. Group 1: Issuance Trends - In the first half of the year, commercial banks issued a total of 52 perpetual bonds, with an issuance scale of 8125.60 billion, representing a year-on-year increase of 3.43% [2]. - The second quarter saw a significant increase in issuance, with a total of 6387 billion issued, reflecting a quarter-on-quarter growth of over 267% and a year-on-year increase of 22.23% [2]. - State-owned banks accounted for over 50% of the total issuance, with a total of 4100 billion, although this was a decrease of 460 billion compared to the previous year [2]. Group 2: Capital Replenishment Pressure - Small and medium-sized banks are under considerable pressure to replenish capital due to declining profitability and limited internal capital retention [3][4]. - The reliance on external capital sources, such as perpetual bonds and convertible bonds, is increasing among these banks [3]. - Experts predict that the demand for external capital will continue, leading to an expansion in the issuance of perpetual bonds [4]. Group 3: Future Outlook - The upcoming expiration of a large volume of perpetual bonds in the second half of the year will necessitate early issuance for replacement, supporting supply [5]. - The core tier one capital adequacy ratio for commercial banks has declined, indicating a need for further capital replenishment [5]. - National joint-stock banks and city commercial banks are expected to become the main issuers in the future, particularly in economically developed regions [5].

Core Viewpoint - Recent approvals for perpetual bonds by banks in Northwest China, specifically Lanzhou Bank and Xi'an Bank, indicate a strategic move to enhance capital adequacy ratios amid tightening capital conditions [5][6][8]. Group 1: Bond Issuance Approvals - Lanzhou Bank has received regulatory approval to issue up to 5 billion RMB in perpetual bonds, with the flexibility to decide on timing, batches, and scale within 24 months [1]. - Xi'an Bank has also been approved to issue up to 7 billion RMB in perpetual bonds, similarly allowing for autonomous decisions regarding issuance timing and scale within the next 24 months [3]. Group 2: Purpose of Bond Issuance - The issuance of perpetual bonds is primarily aimed at improving capital adequacy ratios, as banks are currently facing tighter capital conditions [5]. - Both banks have disclosed their plans for the use of raised funds, with Lanzhou Bank intending to enhance its ability to support local businesses and promote stable business development [8]. - Xi'an Bank plans to use the funds to meet macro-prudential capital adequacy requirements and support its ongoing business growth [8]. Group 3: Market Trends and Context - The issuance of "perpetual bonds" has accelerated since the second quarter, with total issuance surpassing the previous year's figures [5][9]. - As of now, the cumulative issuance of "perpetual bonds" by domestic commercial banks has reached approximately 770.16 billion RMB, with 596.3 billion RMB issued in the second quarter alone [9]. - The decline in bond market interest rates has contributed to the increased pace of issuance, with current costs remaining at historical lows [9].

Report Industry Investment Rating No relevant information provided. Core Viewpoints of the Report - Since April 29, the interest rates of credit bonds have been oscillating downward. The 5-year, 6-year, and 7-year medium-term notes have performed well. The historical percentile of the valuation of industrial bonds with a maturity of over 5 years is generally between 3% and 7% [15]. - Local governments are implementing various measures to boost economic development, aiming to transform into "service-oriented governments" and enhance the competitiveness of local enterprises and cities [5][67]. - In the financial bond market, the yields of various financial bond varieties have declined, and the credit spreads have actively narrowed. The current preferred strategy is the coupon strategy. For Tier 2 perpetual bonds, institutions with stable liability ends can consider extending the duration in advance [5][6][87]. Summary by Related Catalogs 5y+ Industrial Bonds Selection - Consider central state-owned enterprises with significant social responsibilities and influence, such as China Chengtong and China Guoxin. For example, 25 Chengtong Holdings MTN001 has a remaining term of 9.9836 years and a ChinaBond exercise valuation of around 2.17% [15]. - Focus on provincial state-owned enterprises with investment or both urban investment and industrial attributes, like Nantong Metro, Shandong Hi-Speed, and Yuexiu Group. Institutions with high return requirements can consider Shuidi Group and Shaanxi Tourism Group. For instance, 25 Shuidi Group MTN007 has a remaining term of 2.9479 + 2 years and a ChinaBond exercise valuation of around 2.56%, and 25 Shaanxi Tourism V1 has a remaining term of 9.8603 years and a ChinaBond exercise valuation of around 3.27% [16]. - Pay attention to large provincial comprehensive investment entities, such as Fujian Investment & Development Group, which is involved in industries like electricity, gas, financial services, and railways [16]. - Focus on high-grade long-term credit bonds with good liquidity, such as Kunpeng Capital, Hengjian Holdings, and China Everbright Group. China Everbright Group has over 10-year outstanding bonds worth 3 billion yuan and a valuation of about 2.2% [17]. Urban Investment Bonds and Regional Macroeconomics Local Governments Stimulate the Economy with Various Measures - Local governments are implementing measures in various aspects, including boosting consumption, talent cultivation, salary mechanisms, institutional opening, attracting foreign investment, urban renewal, debt resolution, platform transformation, and supporting private enterprises, to enhance local market cultivation, guide enterprise transformation, and encourage scientific research innovation [5][67]. - Examples include Guangzhou's plan to boost consumption, Shenzhen's deepening of reform and opening up, Shanghai's promotion of the replication and implementation of pilot measures in the free trade zone, Shandong's support for the high-quality development of the private economy, and the improvement of the development index of small and medium-sized enterprises [46][51][56][60][66]. Investment Recommendations - Focus on "major economic provinces" with good development momentum and debt management, such as Guangdong, Jiangsu, Zhejiang, Fujian, Anhui, Shanghai, and Beijing. Consider extending the duration to 5 years [71]. - Pay attention to regions where significant policies or substantial funds for debt resolution have been implemented, such as Chongqing, Tianjin, Guangxi, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Gansu, Guizhou, and Yunnan. Consider a duration of 3 - 5 years [72]. - Focus on prefecture-level cities with strong industrial bases and financial support, such as cities in Hunan, Hubei, Henan, Sichuan, Chongqing, Shaanxi, Guangxi, Shanxi, and Jiangxi. Consider a duration of 2 - 3 years [73][76][78]. Financial Bond Weekly Views - The yields of various financial bond varieties have declined, and the credit spreads have actively narrowed. The current preferred strategy is the coupon strategy. For Tier 2 perpetual bonds, institutions with stable liability ends can consider extending the duration in advance. There is still a certain positive carry in short- and medium-term Tier 2 perpetual bonds, and opportunities for spread compression can be explored [6][87]. - The credit spreads of commercial bank bonds with a maturity of over 4 years are at a historical percentile of over 20% since 2022, with greater room for compression. The credit spreads of Tier 2 perpetual bonds with a maturity of over 5 years are also at a historical percentile of over 20%, with potential for spread compression and the possibility of obtaining excess returns in a downward interest rate cycle [6]. - The yield curves of 4-year and 6-year bonds have convex points, providing good riding effects [6].

Group 1: Bond Performance Insights - The "24 铁道 MTN006B" bond shows a significant valuation price deviation of -0.35% with a net price of 108.70 and a yield of 2.12%[4] - The "21 万科02" bond has a positive deviation of 0.75% with a net price of 96.31 and a yield of 9.50%[5] - The "24 齐商银行永续债 01" bond has a slight positive deviation of 0.07% with a net price of 99.63 and a yield of 3.40%[6] Group 2: Market Trends - The majority of non-financial credit bonds have a transaction maturity concentrated in the 2 to 3-year range, with 3 to 4-year bonds showing the highest discount transaction ratio[2] - Real estate bonds rank high among those with transaction yields exceeding 10%[8] - The construction materials sector exhibits the largest average valuation price deviation among industries[2] Group 3: Risk Considerations - There is a risk of statistical data bias or omission, which may lead to discrepancies in reported bond performance[3] - Bonds with significant valuation price deviations may face credit risk due to changes in issuer qualifications[18]

1. Report Industry Investment Rating - No relevant information provided in the report. 2. Report's Core View - Among AA - rated urban investment bonds (subject rating) with a high discount, "24 Hengting 03" has the largest deviation in valuation price. Among the top 50 individual bonds with the largest net - price decline, "23 Chanrong 09" has the largest deviation in valuation price. Among the top 50 individual bonds with the largest net - price increase, "22 Vanke 06" has the largest deviation in valuation price. Among the top 50 secondary perpetual bonds with the largest net - price increase, "24 ABC Secondary Capital Bond 02B" has the largest deviation in valuation price [2]. 3. Summary by Related Catalogs 3.1 Discount - Rate Ranking of AA Urban Investment Bonds - The report presents a list of AA urban investment bonds with high discount rates, including details such as remaining term, valuation price, valuation net - price, valuation yield, etc. "24 Hengting 03" has a remaining term of 4.57 years, a valuation price deviation of - 0.27%, a valuation net - price of 100.53 yuan, and a valuation yield of 2.45% [3]. 3.2 Top 50 Individual Bonds with the Largest Net - Price Decline - The list shows 50 individual bonds with significant net - price declines. "23 Chanrong 09" has a remaining term of 3.38 years, a valuation price deviation of - 0.62%, a valuation net - price of 98.08 yuan, and a valuation yield of 4.02% [5]. 3.3 Top 50 Individual Bonds with the Largest Net - Price Increase - The report lists 50 individual bonds with the largest net - price increases. "22 Vanke 06" has a remaining term of 2.19 years, a valuation price deviation of 0.99%, a valuation net - price of 90.55 yuan, and a valuation yield of 8.61% [7]. 3.4 Top 50 Secondary Perpetual Bonds with the Largest Net - Price Increase - The list includes 50 secondary perpetual bonds with significant net - price increases. "24 ABC Secondary Capital Bond 02B" has a remaining term of 9.00 years, a valuation price deviation of 0.09%, a valuation net - price of 102.56 yuan, and a valuation yield of 2.17% [10].

1. Report Industry Investment Rating - No relevant content provided 2. Core Viewpoints - In the bonds with discounted transactions, "22 Zunqiao 05" had a relatively large deviation in bond valuation price. Among the bonds with rising net prices, "20 Vanke 08" had a relatively high deviation in valuation price. Among the Tier 2 and perpetual bonds with rising net prices, "23 Huaxing Bank Tier 2 Capital Bond 01" had a relatively large deviation in valuation price. Among the commercial financial bonds with rising net prices, "24 Zhuhai Rural Commercial Bank Bond" had a relatively high deviation in valuation price. Among the bonds with a transaction yield higher than 10%, real estate bonds ranked high [2]. - The changes in credit bond valuation yields were mainly distributed in the (0,5] range. The transaction term of non - financial credit bonds was mainly within 0.5 years, and the 3 - 4 - year variety had the highest proportion of discounted transactions. The transaction term of Tier 2 and perpetual bonds was mainly between 4 - 5 years, and the variety within 1.5 years had the highest proportion of discounted transactions. By industry, the bonds in the automotive industry had the largest average deviation in valuation price [2]. 3. Summary by Relevant Catalogs 3.1 Discounted Transaction Tracking - Bonds such as "22 Zunqiao 05", "25 Zhangjiu 02", etc. had discounted transactions. The remaining terms, valuation price deviations, valuation yields, and other indicators varied. For example, "22 Zunqiao 05" had a remaining term of 2.00 years, a valuation price deviation of - 0.30%, a valuation yield of 4.66%, and a transaction scale of 8.04 million yuan [4]. 3.2 Tracking of Bonds with Rising Net Prices - Bonds like "20 Vanke 08", "22 Vanke 07" had rising net prices. "20 Vanke 08" had a remaining term of 0.58 years, a valuation price deviation of 0.50%, a valuation yield of 14.31%, and a transaction scale of 14.53 million yuan [5]. 3.3 Tracking of Tier 2 and Perpetual Bond Transactions - "23 Huaxing Bank Tier 2 Capital Bond 01" had a relatively large deviation in valuation price among Tier 2 and perpetual bonds. The valuation yield deviation was - 3.60bp, the remaining term was 0.11 years, and the transaction scale was 41.5 million yuan [6]. 3.4 Tracking of Commercial Financial Bond Transactions - "24 Zhuhai Rural Commercial Bank Bond" had a relatively high deviation in valuation price among commercial financial bonds. The valuation yield deviation was - 2.15bp, the remaining term was 2.19 years, and the transaction scale was 60.32 million yuan [7]. 3.5 Tracking of Bonds with a Transaction Yield Higher than 10% - Real estate bonds such as "20 Vanke 08", "22 Vanke 07" had a transaction yield higher than 10%. For example, "20 Vanke 08" had a valuation yield of 14.31% and a transaction scale of 14.53 million yuan [8]. 3.6 Distribution of Credit Bond Valuation Yield Changes - The changes in credit bond valuation yields were mainly distributed in the (0,5] range [2]. 3.7 Distribution of Non - Financial Credit Bond Transaction Terms - The transaction term of non - financial credit bonds was mainly within 0.5 years, and the 3 - 4 - year variety had the highest proportion of discounted transactions [2]. 3.8 Distribution of Tier 2 and Perpetual Bond Transaction Terms - The transaction term of Tier 2 and perpetual bonds was mainly between 4 - 5 years, and the variety within 1.5 years had the highest proportion of discounted transactions [2]. 3.9 Proportion and Transaction Scale of Discounted Transactions of Non - Financial Credit Bonds by Industry - The bonds in the automotive industry had the largest average deviation in valuation price [2].

1. Report Industry Investment Rating There is no information provided regarding the report industry investment rating. 2. Core Viewpoints of the Report According to Wind data, among the bonds traded at a discount, '25 Henan Road and Bridge MTN002' had a relatively large deviation in valuation price. Among the bonds with rising net prices, '21 Vanke 02' had a leading deviation in valuation price. Among the secondary perpetual bonds with rising net prices, '23 Dalian Bank Perpetual Bond 01' had a relatively large deviation in valuation price. Among the commercial financial bonds with rising net prices, '25 China Zheshang Bank Small and Micro Enterprise Bond 01BC' had a leading deviation in valuation price. Among the bonds with a trading yield higher than 10%, real estate bonds ranked at the top. The changes in credit bond valuation yields were mainly distributed in the (0,5] range. The trading terms of non - financial credit bonds were mainly distributed between 2 and 3 years, with the 2 - 3 year - term varieties having the highest proportion of discount trading. The trading terms of secondary perpetual bonds were mainly distributed between 4 and 5 years, with the varieties within 1 year having the highest proportion of discount trading. By industry, the bonds in the pharmaceutical and biological industry had the largest average deviation in valuation price [2]. 3. Summary by Relevant Catalogs 3.1 Discounted Bond Trading - The report tracked the trading of significantly discounted bonds, including details such as the bond name, remaining term, valuation price deviation, valuation net price, valuation yield deviation, valuation yield, previous day's valuation yield, implied rating, issuer rating, industry, and trading volume. For example, '25 Henan Road and Bridge MTN002' had a remaining term of 2.89 years, a valuation price deviation of - 0.27%, a valuation net price of 99.74 yuan, and a trading volume of 39.52 million yuan [4]. 3.2 Bonds with Rising Net Prices - The report tracked the trading of bonds with significant positive deviations in net prices, including details such as the bond name, remaining term, valuation price deviation, valuation net price, valuation yield deviation, valuation yield, previous day's valuation yield, implied rating, issuer rating, industry, and trading volume. For example, '21 Vanke 02' had a remaining term of 0.79 years, a valuation price deviation of 1.11%, a valuation net price of 90.78 yuan, and a trading volume of 9.01 million yuan [5]. 3.3 Secondary Perpetual Bond Trading - The report tracked the trading of secondary perpetual bonds, including details such as the bond name, remaining term, valuation price deviation, valuation net price, valuation yield deviation, valuation yield, previous day's valuation yield, implied rating, issuer rating, bank category, and trading volume. For example, '23 Dalian Bank Perpetual Bond 01' had a remaining term of 2.78 years, a valuation price deviation of 0.11%, a valuation net price of 104.40 yuan, and a trading volume of 198.16 million yuan [6]. 3.4 Commercial Financial Bond Trading - The report tracked the trading of commercial financial bonds, including details such as the bond name, remaining term, valuation price deviation, valuation net price, valuation yield deviation, valuation yield, previous day's valuation yield, implied rating, issuer rating, bank category, and trading volume. For example, '25 China Zheshang Bank Small and Micro Enterprise Bond 01BC' had a remaining term of 2.99 years, a valuation price deviation of 0.01%, a valuation net price of 100.01 yuan, and a trading volume of 1.75021 billion yuan [7]. 3.5 Bonds with a Trading Yield Higher than 10% - The report tracked the trading of high - yield bonds, including details such as the bond name, remaining term, valuation price deviation, valuation net price, valuation yield deviation, valuation yield, previous day's valuation yield, implied rating, issuer rating, industry, and trading volume. For example, '21 Vanke 02' had a remaining term of 0.79 years, a valuation price deviation of 1.11%, a valuation net price of 90.78 yuan, a valuation yield of 17.14%, and a trading volume of 9.01 million yuan [8]. 3.6 Distribution of Credit Bond Valuation Deviations The changes in credit bond valuation yields were mainly distributed in the (0,5] range [2]. 3.7 Distribution of Non - financial Credit Bond Trading Terms The trading terms of non - financial credit bonds were mainly distributed between 2 and 3 years, with the 2 - 3 year - term varieties having the highest proportion of discount trading [2]. 3.8 Distribution of Secondary Perpetual Bond Trading Terms The trading terms of secondary perpetual bonds were mainly distributed between 4 and 5 years, with the varieties within 1 year having the highest proportion of discount trading [2]. 3.9 Distribution of Discounted Trading Proportions and Trading Volumes by Industry By industry, the bonds in the pharmaceutical and biological industry had the largest average deviation in valuation price [2].

Report Summary 1. Core Viewpoints - Among the bonds with discounted transactions, "24 Xintai 01" had a relatively large deviation in bond valuation price. Among the bonds with rising net prices, "24 Kunpeng Investment MTN004B" had a relatively large deviation in valuation price. Among the Tier 2 and perpetual bonds with rising net prices, "23 Tianjin Bank Tier 2 Capital Bond 01" had a relatively large deviation in valuation price. Among the commercial financial bonds with rising net prices, "23 Hangzhou Bank 01" had a relatively large deviation in valuation price. Among the bonds with a transaction yield higher than 10%, real estate bonds ranked high [2]. - The changes in credit bond valuation yields were mainly distributed in the (0,5] range. The transaction terms of non - financial credit bonds were mainly distributed between 4 and 5 years, with the 1 - 1.5 - year - term variety having the highest proportion of discounted transactions. The transaction terms of Tier 2 and perpetual bonds were mainly distributed between 4 and 5 years, with the varieties within 1 year and 2 - 3 years having the highest proportion of discounted transactions. By industry, real estate industry bonds had the largest average deviation in valuation price [2]. 2. Key Points from Related Tables 2.1 Discounted Transaction Tracking - Bonds such as "24 Xintai 01", "25 Wujian 01", and "25 Wuhu Investment Control MTN001" had discounted transactions, with their remaining terms ranging from 2.18 to 9.96 years, and the deviation in valuation price ranging from - 0.05% to - 0.24%. The industries involved included urban investment, comprehensive, and non - bank finance [4]. 2.2 Tracking of Bonds with Rising Net Prices - Bonds like "24 Kunpeng Investment MTN004B", "24 Zhonghua 08", and "24 Sichuan Energy Investment GN001" had rising net prices, with their remaining terms ranging from 0.88 to 29.29 years, and the deviation in valuation price ranging from 0.12% to 0.55%. The industries mainly included non - bank finance, comprehensive, and urban investment [5]. 2.3 Tier 2 and Perpetual Bond Transaction Tracking - "23 Tianjin Bank Tier 2 Capital Bond 01" had a relatively large deviation in valuation price among Tier 2 and perpetual bonds. Banks involved included city commercial banks, rural commercial banks, and state - owned banks, with transaction scales ranging from 4623 to 122511 million yuan [6]. 2.4 Commercial Financial Bond Transaction Tracking - "23 Hangzhou Bank 01" had a relatively large deviation in valuation price among commercial financial bonds. Banks included city commercial banks, joint - stock banks, and state - owned banks, with transaction scales ranging from 1010 to 44457 million yuan [7]. 2.5 Tracking of Bonds with a Transaction Yield Higher than 10% - Bonds such as "21 Vanke 06", "21 Vanke 04", and "22 Vanke 07" had a transaction yield higher than 10%, all belonging to the real estate industry, with transaction scales ranging from 488 to 1293 million yuan [8]. 2.6 Distribution of Credit Bond Transaction Valuation Deviations on the Day - The changes in credit bond valuation yields were mainly distributed in the (0,5] range [2]. 2.7 Distribution of Non - financial Credit Bond Transaction Terms on the Day - The transaction terms of non - financial credit bonds were mainly distributed between 4 and 5 years, and the 1 - 1.5 - year - term variety had the highest proportion of discounted transactions [2]. 2.8 Distribution of Tier 2 and Perpetual Bond Transaction Terms on the Day - The transaction terms of Tier 2 and perpetual bonds were mainly distributed between 4 and 5 years, and the varieties within 1 year and 2 - 3 years had the highest proportion of discounted transactions [2]. 2.9 Discounted Transaction Proportion and Transaction Scale of Non - financial Credit Bonds in Each Industry - The real estate industry had the largest average deviation in non - financial credit bond valuation price, and different industries had different transaction scales [2][18]