Report Summary 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoint of the Report - Short - term, medium - to high - grade credit bonds remain the top choice, and the idea of excavating based on the issuer's yield curve should be continued. In the current environment, the market pursues certainty and low volatility, so short - term, medium - to high - grade credit bonds are preferred for the pure - bond part. It is recommended to look for riding opportunities in the steep part of the curve or "convex points" of individual bonds when gradually moving towards the medium - and long - term [5][8]. - There are issuers with relatively large term spreads among those with an implied rating of AA+ or above. After the trading concentration in the 1 - 2Y segment further increases, the 2 - 3Y term spread may be repaired, which is suitable for institutions with strong liability - side stability to layout in advance. For issuers with an implied AA rating, there is also room for excavation, and investors can sink according to their needs [5][10][12]. 3. Summary by Directory 3.1 Credit Bond Weekly Viewpoint - The short - term, medium - to high - grade credit bonds are still the best option. Last week, the bond market sentiment was fragile, affected by the stock market sentiment and negative news such as fund fee adjustment and tax exemption cancellation. The short - term of credit bonds also adjusted last week, but the adjustment was limited due to the short duration, and the 2 - 3Y medium - term adjusted more, causing the 3Y - 1Y term spread to widen [5][8]. - For specific excavation, among issuers with an implied AA+ rating or above, the 2Y - 1Y term spread is mostly around 10 - 15bp, and the 3Y - 2Y is concentrated in the range of 15 - 20bp. For issuers with an implied AA rating, the 2Y - 1Y term spread of 20 - 30bp is relatively high, and 15 - 20bp has relatively large excavation space [5][10][12]. 3.2 Credit Bond Weekly Review 3.2.1 Negative Information Monitoring - There were no bond defaults, issuer rating or outlook downgrades, or bond rating downgrades this week. However, some overseas ratings were adjusted. For example, Fitch downgraded the long - term foreign - currency issuer default rating and senior unsecured rating of China State Construction Engineering Corporation Limited from "A" to "A - ", and Moody's downgraded the long - term credit rating of Sinochem Hong Kong (Group) Limited from A3 to Baa1 [15][16]. - There were several major negative events, including some real - estate companies facing litigation, being restricted from high - end consumption, and failing to repay debts on time [17]. 3.2.2 Primary Market Issuance - The primary issuance volume of credit bonds doubled week - on - week, the maturity volume was roughly the same, and the market returned to net financing. The primary issuance cost of medium - to high - grade new bonds was basically flat week - on - week. Six credit bonds were cancelled or postponed for issuance, with a total scale of 290 million yuan [17][18][20]. 3.2.3 Secondary Market Trading - The valuations of credit bonds across all grades and terms were adjusted again, with the central adjustment range around 5bp. Credit spreads were mostly flat, and some medium - and long - term spreads were passively narrowed. The 3Y - 1Y term spread of medium - to high - grade bonds widened, while most other spreads narrowed. The AA - AAA grade spread fluctuated slightly, with the 5Y spread widening by up to 3bp [22][24]. - In terms of credit spreads, most provincial credit spreads of urban investment bonds fluctuated within ±1bp, with medium - to high - valuation regions tending to narrow. Most industry spreads of industrial bonds were flat, and the steel industry spread narrowed by up to 3bp week - on - week [26][28]. - The liquidity of credit bonds further declined, and the turnover rate increased by 0.04 percentage points to 1.53%. The issuers of bonds with the top - widening spreads were mostly real - estate companies, and the valuation of private construction company Xinjie Investment also increased significantly [5][32].

Group 1 - The core viewpoint of the report highlights the significant growth of the first batch of 10 Sci-Tech Bond ETFs, which reached a total scale of over 120 billion yuan, increasing by more than 90 billion yuan since their launch [1][9][12] - The report notes that the trading volume of some Sci-Tech Bond ETFs has decreased to below 10% since the end of July, but has recently rebounded as the market stabilizes [1][16] - The weighted duration of the bonds held by the 10 Sci-Tech Bond ETFs ranges from 3.20 to 4.74 years, indicating a relatively long duration compared to the initial listing [23][24] Group 2 - The report identifies the most heavily held component bonds, with issuers such as State Power Investment Group and China Railway Corporation having holdings exceeding 3 billion yuan [2][32] - Other notable issuers with holdings between 2 to 3 billion yuan include China Ordnance Industry Group and China National Building Material [2][32] - The report provides a detailed breakdown of the holdings of the top 50 component bonds, indicating a concentration in the 1-3 year and 3-5 year maturity ranges [33][35] Group 3 - Since July, the credit bond yields and credit spreads have shown a "W-shaped" trend, with component bonds experiencing significant valuation changes compared to non-component bonds [3][36] - In the early July period, the demand for building positions in the newly launched Sci-Tech Bond ETFs led to a rapid decline in the valuations of component bonds, which outperformed non-component bonds by approximately 10 basis points [3][38] - The report notes that during the adjustment phase, the short-term component bonds reacted most significantly to market changes, while the 1-3 year and 3-5 year component bonds showed higher volatility during recovery periods [3][43] Group 4 - The upcoming issuance of the second batch of Sci-Tech Bond ETFs is expected to further benefit the valuation of component bonds and compress spreads, as current valuations present a better cost-performance ratio compared to mid-July lows [4][30] - The report suggests that there may be limited room for further compression in valuations for high-rated individual bonds, with an estimated potential of 14-15 basis points [4][30] - From an investment perspective, the report advises early positioning in component bonds to avoid the trap of trying to capture the last few basis points during market fluctuations [4][30]

Core Viewpoint - The bond market has shown resilience in the first half of 2025, with several bond funds outperforming their benchmarks due to effective management strategies in a volatile environment [1][2][5]. Group 1: Fund Performance - As of August 24, 2025, South China Fund Management Company reported that 12 out of 20 products released their mid-term reports, with all 12 bond funds showing positive net value growth rates [2]. - Notable performers include South China Rui Ze Bond A, which achieved a net value growth rate of 6.15%, surpassing its benchmark by 6.21 percentage points, and South China Rui Li Bond A, which rose by 2.04%, exceeding its benchmark by 2.18 percentage points [1][2]. Group 2: Market Dynamics - The bond market experienced fluctuations due to a tightening of the funding environment and rising interest rates, followed by a stabilization supported by the central bank [2][3]. - Funds have adjusted their investment portfolios flexibly to navigate the complex market conditions, with six bond funds outperforming their benchmarks in the first half of the year [2][3]. Group 3: Investment Strategies - Some bond funds increased their allocation to short-duration bonds to mitigate risks associated with interest rate volatility, with South China Rui Heng Short-Duration Bond holding 100 million yuan in short-term financing bonds, up from 50.43 million yuan at the end of the previous year [3]. - Fund managers focused on credit analysis have selectively invested in high-quality credit bonds to enhance returns, with South China Rui Yang Pure Bond A and South China Rui Xiang Pure Bond A achieving net value growth rates that exceeded their benchmarks by 0.59 and 0.48 percentage points, respectively [3][4]. Group 4: Outlook for the Second Half - Institutions express a cautiously optimistic view for the bond market in the second half of the year, anticipating a continuation of the current volatile environment but with potential structural opportunities [5][6]. - The overall bond market is expected to remain in a fluctuating state, supported by a moderately loose monetary policy and a stable liquidity environment, while concerns about rising funding costs may temper expectations for bond yield declines [5][6].

Group 1 - The total scale of credit bond ETFs is 347.6 billion yuan, with a daily decrease of 800 million yuan [1] - The median weighted duration is 3.9 years, indicating the average time until cash flows are received [1] - The overall trading volume is 68.4 billion yuan, with an average single transaction amount of 760,000 yuan [1] Group 2 - The median yield is 1.90%, and the median discount rate is -33.8 basis points [1] - The Ping An Company Bond ETF (511030) has the best performance in controlling drawdown this year, with a net value that remains stable [1] - The data shows various ETFs with their respective scales, weekly performance, and drawdown metrics, highlighting the performance of different funds [1]

Group 1 - The overall credit bond yields have followed the adjustment of interest rate bonds, with credit spreads showing mixed changes. Specifically, the decline in the 3-5 year high-grade perpetual bonds was the most significant, reaching 6-11 basis points, while the longer-term bonds also experienced notable declines [1][11] - City investment bonds saw a greater decline compared to medium-short bonds, with the 7-year ultra-long city investment bonds experiencing the largest drop of around 8 basis points [1][11] - The credit spread for medium-short bonds, especially those with maturities of 4 years and above, was generally weaker than that of the same maturity national development bonds, leading to a passive narrowing of credit spreads during the week [1][11] Group 2 - Since July, the trading volume of public credit bonds has been continuously shrinking, and the duration has also decreased from its high levels. The long-term credit bonds (over 5 years) have shown relative resilience due to buying from insurance and wealth management products, while the buying power from funds has decreased significantly [2][16] - The valuation of ETF constituent bonds has generally followed the market adjustment, but the decline in valuation for constituent bonds was structurally lower than that of non-constituent bonds of similar maturity [3][24] - The long-end constituent bonds, especially ultra-long bonds, were more resilient during the week, with most individual bonds experiencing smaller valuation declines compared to non-constituent bonds [3][44] Group 3 - Since May, the trading duration of perpetual bonds has been continuously extended, with both the trading volume and proportion of bonds with maturities over 5 years reaching year-to-date highs. This indicates a shift from trading to allocation among major participating institutions [4][46] - The supply of perpetual bonds, including TLAC bonds, has significantly increased during this period, and the buying power from public funds has been higher than selling power, particularly for long-end perpetual bonds [4][47] Group 4 - As of August 15, 2025, some AA and AA(2) credit bonds with maturities within 2 years have seen yields drop to over 1.9%, indicating the value of short-term bonds. These bonds also possess defensive attributes amid market volatility, as the bond market will continue to be influenced by equity market fluctuations [5][60] - The 3-4 year perpetual bonds have emerged as a cost-effective option, with their yield curve steepening and current valuations being higher than those of similarly rated medium-short bonds and city investment bonds, offering better trading value and liquidity [5][60]

Core Insights - The report emphasizes a continued preference for high-grade long-duration credit bonds amidst a fluctuating but generally strong market trend [1][62] - It highlights a slight decrease in the issuance scale of credit bonds in July, with a net financing increase, indicating a mixed but generally positive market sentiment [2][12][19] Group 1: Primary Market Conditions - In July, a total of 1,435 credit bonds were issued, amounting to 12,900.31 billion, reflecting a month-on-month decrease of 1.27% [12] - The net financing amount for credit bonds increased to 3,662.83 billion, a month-on-month increase of 954.08 billion [12] - The issuance rates for various maturities decreased, with overall changes ranging from -20 BP to -1 BP [14][18] Group 2: Secondary Market Conditions - The total transaction volume of credit bonds in July reached 41,783.17 billion, representing a month-on-month growth of 4.05% [19] - Credit spreads for most varieties of credit bonds narrowed, with the trend mirroring that of yields [22][29] - The report notes that the overall yield of credit bonds exhibited a volatile trend, with a monthly average decline compared to June [62] Group 3: Investment Perspectives - The report suggests that the current market conditions favor high-grade bonds due to their potential for price recovery and the limited space for compression in short-term credit spreads [62][67] - It recommends focusing on bonds from state-owned enterprises and high-quality private enterprises with strong guarantees, as these are expected to provide better risk-adjusted returns [67] - The report also indicates that the ongoing adjustments in the market necessitate a strategic approach to bond selection, emphasizing the importance of monitoring interest rate trends and individual bond coupon values [62][67]

Fixed Income Research - The report indicates that the overall issuance guidance rates for credit bonds have mostly decreased, with a change range of -5 BP to 2 BP [2] - The issuance scale of credit bonds has increased on a month-on-month basis, with net financing amounts for medium-term notes and short-term financing bonds rising, while corporate bonds, company bonds, and targeted tools saw a decrease [2] - In the secondary market, the transaction amount of credit bonds has increased, with all varieties showing growth; however, credit bond yields have risen by 4-14 BP [2] - The report suggests that despite the recent yield adjustments, the conditions for a trend reversal in credit bonds remain insufficient, but the support from insufficient supply and strong demand may lead to a potential decline in yields [2] - The report emphasizes a cautious yet optimistic approach to current configurations and trading strategies, focusing on the trends in interest rate bonds and the coupon value of individual bonds [2] Industry Research - In the steel sector, prices have rebounded, leading to some replenishment intentions downstream, with macro "anti-involution" news positively impacting steel prices [5] - The aluminum market is expected to experience price fluctuations due to insufficient fundamental support, with attention on the outcomes of the July Politburo meeting and US-China trade negotiations [5] - Lithium prices have been positively influenced by "anti-involution" news, but there is still significant pressure from oversupply, necessitating caution regarding speculative demand [5] - The rare earth sector has seen a significant increase in exports, with June exports rising by 32.02% month-on-month, indicating potential for further price strength due to improving export demand [5] - The report maintains a "positive" rating for the steel industry and the non-ferrous metals sector, highlighting specific companies for potential investment [6]

Group 1 - The credit bond market is expected to experience strong fluctuations in August due to multiple factors, including the upcoming Politburo meeting and the end of the temporary period for "reciprocal tariffs" between China and the US on August 14, which may affect market sentiment [1][11] - The overall trend of credit bonds is likely to remain stable in the short term, with limited downward potential, as the central bank's supportive stance continues to provide backing for the bond market [1][11] - After recent adjustments, credit bond spreads are still compressing, and institutional investors are expected to gradually enter the market, driven by the current "asset shortage" environment [1][11] Group 2 - The supply of credit bonds is not expected to increase significantly, with the growth of sci-tech bonds potentially offsetting the reduction in local government bonds, but overall net supply is likely to remain constrained [2][14] - The weighted coupon rate of sci-tech bonds is below 2%, indicating a scarcity of high-yield assets, which maintains a strong demand for credit bonds in the market [2][14] - The investment value of credit bonds has improved after a significant adjustment, particularly for mid-to-high-grade short- to medium-term credit varieties, which are now yielding above 10% historical levels [19][20] Group 3 - Manufacturing, new infrastructure, and consumption are expected to be key areas of policy focus in the second half of the year, with various measures likely to be introduced to support these sectors [22][23] - The macroeconomic data for the first half of 2025 shows a resilient economy, with GDP growth of 5.3% and industrial output growth of 6.4%, indicating a stable economic environment for credit bonds [22][23] - The government is likely to implement more policies to regulate the competitive order in the new energy vehicle industry, which may improve cash flow for upstream suppliers [24][29]

Report Industry Investment Rating No relevant content provided. Core Viewpoints - From July 14th to July 20th, the issuance guiding rates announced by the National Association of Financial Market Institutional Investors showed divergence, with high - grade rates rising overall and medium - low - grade rates falling overall, with a change range of - 5 BP to 3 BP. The issuance scale of credit bonds decreased slightly month - on - month, and the net financing amount also decreased. In the secondary market, the trading volume of credit bonds continued to decline, and the yields of credit bonds decreased overall. The credit spreads of medium - short - term notes, enterprise bonds, and urban investment bonds narrowed overall. [1][62] - From a long - term perspective, the yields of credit bonds are still in a downward channel. Due to the current high price, the risk of chasing high is relatively large. When allocating, investors can wait for opportunities and increase positions during adjustments. They should focus on the change trend of interest - rate bonds and the coupon value of individual bonds. At present, the effect of credit sinking is not good, and there is a demand to increase the duration to increase returns. High - grade 5 - year varieties can be considered first. [1][62] - The central and local governments have continuously optimized real - estate policies, which have played a positive role in promoting the real - estate market to stop falling and stabilize. For real - estate bonds, investors with high risk preferences can consider early layout, focusing on central and state - owned enterprises with stable historical valuations and high - quality private - enterprise bonds with strong guarantees. For urban investment bonds, the possibility of default is very low, and they can still be a key allocation variety of credit bonds. [2][66][68] Summary by Directory 1. Primary Market Situation 1.1 Issuance and Maturity Scale - From July 14th to July 20th, a total of 343 credit bonds were issued, with an issuance amount of 281.016 billion yuan, a month - on - month decrease of 0.66%. The net financing amount was 44.902 billion yuan, a month - on - month decrease of 38.421 billion yuan. [12] - In terms of different varieties, the issuance amounts of corporate bonds and private placement notes decreased, while those of enterprise bonds, medium - term notes, and short - term financing bills increased. The net financing amounts of enterprise bonds and private placement notes increased, while those of corporate bonds, medium - term notes, and short - term financing bills decreased. The net financing amounts of enterprise bonds, private placement notes, and short - term financing bills were negative, while those of corporate bonds and medium - term notes were positive. [13] 1.2 Issuance Interest Rates - The issuance guiding rates announced by the National Association of Financial Market Institutional Investors showed divergence. High - grade rates rose overall, and medium - low - grade rates fell overall, with a change range of - 5 BP to 3 BP. By term, the 1 - year, 3 - year, 5 - year, and 7 - year varieties had different interest - rate change ranges. By grade, different grades also had different interest - rate change ranges. [14] 2. Secondary Market Situation 2.1 Market Trading Volume - From July 14th to July 20th, the total trading volume of credit bonds was 864.586 billion yuan, a month - on - month decrease of 5.24%. The trading volumes of all varieties decreased. [19] 2.2 Credit Spreads - For medium - short - term notes, all varieties' credit spreads narrowed. For enterprise bonds, all varieties' credit spreads narrowed. For urban investment bonds, most varieties' credit spreads narrowed, but there were some exceptions in specific grades and terms. [22][33][37] 2.3 Term Spreads and Rating Spreads - For AA + medium - short - term notes, the 3Y - 1Y term spread narrowed by 0.35 BP, the 5Y - 3Y term spread narrowed by 0.44 BP, and the 7Y - 3Y term spread widened by 2.17 BP. For 3 - year medium - short - term notes, the (AA - )-(AAA) rating spread narrowed by 1.00 BP, the (AA)-(AAA) rating spread widened by 1.00 BP, and the (AA + )-(AAA) rating spread remained unchanged. [46] - For AA + enterprise bonds, the 3Y - 1Y term spread narrowed by 1.19 BP, the 5Y - 3Y term spread widened by 0.78 BP, and the 7Y - 3Y term spread widened by 1.28 BP. For 3 - year enterprise bonds, the (AA - )-(AAA) rating spread widened by 1.00 BP, the (AA)-(AAA) rating spread widened by 1.00 BP, and the (AA + )-(AAA) rating spread remained unchanged. [52] - For AA + urban investment bonds, the 3Y - 1Y term spread narrowed by 0.45 BP, the 5Y - 3Y term spread widened by 2.29 BP, and the 7Y - 3Y term spread widened by 1.24 BP. For 3 - year urban investment bonds, the (AA - )-(AAA) rating spread widened by 7.00 BP, the (AA)-(AAA) rating spread widened by 2.00 BP, and the (AA + )-(AAA) rating spread widened by 1.00 BP. [55] 3. Credit Rating Adjustment and Default Bond Statistics 3.1 Credit Rating Adjustment Statistics - From July 14th to July 20th, a total of 4 companies had their ratings (including outlooks) adjusted, with 1 downgraded and 3 upgraded. [59] 3.2 Default and Extended - Maturity Bond Statistics - From July 14th to July 20th, there were no credit - bond defaults or bond - maturity extensions. [61] 4. Investment Views - The investment views are basically the same as the core viewpoints, emphasizing the current situation of credit - bond issuance, trading, and spread changes, and providing investment suggestions from absolute and relative return perspectives. At the same time, it is necessary to pay attention to the impact of stable - growth policies, capital - market conditions, and supply - demand patterns on the bond market. [1][62] - For real - estate bonds, with the real - estate market showing signs of stabilization, investors with high risk preferences can consider early layout, focusing on high - quality bonds and properly speculating on the trading opportunities brought by the valuation repair of undervalued real - estate enterprise bonds. For urban investment bonds, they can still be a key allocation variety, and the short - term credit risk is controllable. [2][66][68]

Group 1 - The report suggests that for most investors, it is time to gradually take profits on ultra-long credit bonds due to declining odds of capital gains, limited arbitrage opportunities, and weak coupon protection [6][14][18] - The performance of ultra-long credit bonds has been primarily driven by the compression of liquidity premiums in June, but this trend is expected to be difficult to sustain moving forward [7][14] - The report indicates that the current coupon advantage of ultra-long credit bonds is not significant, and their ability to protect against interest rate fluctuations is lacking, leading to a low probability of success for short-term holdings [12][18] Group 2 - The weekly review of credit bonds shows that the issuance volume remained stable, with a slight increase in maturity amounts, resulting in a net inflow of 452 billion yuan, which is a decrease compared to previous weeks [20][22] - The average coupon rates for newly issued AAA and AA+ rated bonds were 1.99% and 2.24%, respectively, indicating a mixed trend in issuance costs [20][21] - The liquidity of credit bonds continues to weaken, with a decrease in turnover rate to 1.76%, reflecting a return to a relatively low level [23]