1. Report Industry Investment Rating No information provided in the report. 2. Core Viewpoints of the Report - The market has a consensus on the ability of high - grade credit entities to cross the debt - resolution cycle, and AAA urban investment bonds may be the most defensive when emphasizing safety while extending duration [3][20][30] - The AA(2) urban investment bonds around 1 - year in Xi'an and AA urban investment bonds around 2 - year in Tianjin have obvious inflection points, indicating that the market has priced certain risks for relevant entities or regions outside the debt - resolution boundary [3][30][32] - In the context of narrowing debt - resolution policy windows and increasing debt continuation difficulties, some weak - quality regional entities may show a similar steepening pattern, and regions like Henan should be noted [3][32] 3. Summary According to the Directory 3.1 Duration Selection Dilemma: To Continue Earning Returns, One Needs to Cross the Debt - Resolution Time Point - Before 2026, institutional allocation of urban investment bonds showed obvious regional sinking, and duration allocation was concentrated around the 2028 debt - resolution time window. Since 2026, the allocation has extended to 3 - 4 - year medium - and long - term urban investment bonds [9] - Comparing the top ten holdings of public funds at the end of Q4 2025 and Q2 2023, the holdings of Yunnan, Guizhou, Jilin, Tianjin, Shanxi, Guangxi, Gansu, and Ningxia increased by more than double, while those of Guangdong, Fujian, Jiangsu, Anhui, Shanghai, and Beijing decreased by 20% - 30% [9][10] - From the perspective of public funds' top ten holdings, the scale of urban investment bonds held by funds reached the highest in Q1 2024 and then declined. The term structure also adjusted, with a tendency to reduce short - duration and increase long - duration bonds [11] - In 2026, the 4 - year term, which is the most popular, has crossed the debt - resolution time point. In terms of yield, credit spread, and term spread, the 4 - year term shows better performance, but one should be vigilant against valuation deviation [15][16][19] 3.2 Valuation Thinking at the Debt - Resolution Boundary: Whether Curve Steepening Occurs - **AAA Urban Investment Bonds**: The yields of urban investment bonds in each province are basically stable around the yield curve, with small differences between provinces, indicating consistent pricing and no "steepening at the debt - resolution time point". They are defensive, but attention should be paid to the differentiation between entities [20] - **AA + Urban Investment Bonds**: Some debt items in Jiangsu, Zhejiang, Fujian, Shandong, Hubei and other places deviate from the valuation yield curve, with deviations concentrated in specific entities or regions. There is no "steepening at the debt - resolution time point" but obvious entity and regional differentiation [23] - **AA Urban Investment Bonds**: The market does not conduct systematic sinking but gives credit premiums through yield curve deviation and term inflection points, showing "steepening at the debt - resolution time point" characteristics. For example, Tianjin's 2 - year bonds have obvious inflection points [26][30] - **AA(2) Urban Investment Bonds**: With more samples, yield curve deviation and term inflection points are more obvious, showing "steepening at the debt - resolution time point". The market is more worried about weak - quality regions with frequent negative public opinions, and the yield shows an inflection point around 1 - year [29][30]