1. Report Industry Investment Rating There is no information about the industry investment rating in the report. 2. Core Viewpoints of the Report - The off - market redemption of AVIC Industry Finance reflects that the essence of credit bond risk research is not only the default risk affected by solvency but also the bond valuation fluctuations and liquidity risks caused by short - term risk events of bond - issuing enterprises. In the economic downturn cycle, the importance of fundamental research is highlighted. The risk events of AVIC Industry Finance may not be an isolated case, and the possibility of a new round of credit risks should be noted. If risk events accumulate, the new credit bond pricing logic may shift from "belief - driven" to "cash - flow verification", forming a new trend of expanding the weight of fundamental pricing [5][38]. 3. Summary According to the Table of Contents 3.1 How to Understand "Off - market Redemption"? 3.1.1 Definition and Regulatory Basis - "Off - market redemption" refers to the act where the issuer and bondholders reach an agreement and directly transfer funds to complete the redemption without going through the bond custody and settlement institution. After off - market redemption, the bond will be cancelled, and a new borrowing relationship will be established based on the relevant agreement. If all shares of the corresponding bond are cancelled due to off - market redemption, the issuer can apply for delisting [12]. - In the inter - bank market, the clearing house and the dealer association have regulations on off - market redemption. For off - market redemption, a bondholders' meeting needs to be held for voting. As a special motion, it requires more than two - thirds of the voting rights of the participating bondholders and more than half of the total voting rights of the debt financing instruments. If the motion is passed, the issuer should sign an agreement with the bondholders who agree to cancel, and the shares of the debt financing instruments held by the bondholders who choose not to cancel can continue to exist [13][15]. - The exchange has not issued separate requirements for off - market redemption and mainly relies on the relevant regulations of the bondholders' meeting. If off - market redemption is recognized as a major event, it requires more than two - thirds of the voting rights of all bondholders with voting rights to take effect; if it is a general matter, the corresponding proportion is one - half [15]. 3.1.2 What are the Impacts of Off - market Redemption? - For the issuer, off - market redemption helps maintain the market image and financing ability and relieve short - term liquidity pressure. It can avoid public bond defaults and reduce the negative impact on financing channels [17]. - For investors, off - market redemption may bring risks of reduced liquidity and valuation fluctuations. However, it also helps avoid the issuer's liquidity crisis and substantial bond defaults, which could cause greater losses to investors [17]. 3.2 Analysis of Historical Cases of "Off - market Redemption" - There have been 14 historical cases of off - market redemption, mainly occurring from 2019 to 2022. Most of the cases are due to companies' liquidity shortages, and the triggering entities are mainly private enterprises. The probability of substantial default of off - market redemption entities is relatively high, with 11 out of 14 cases experiencing bond defaults [4][18]. - The common characteristics of off - market redemption cases are: the issuer may not reach an agreement with bondholders before the announcement; the redemption consideration is generally "face value + coupon interest"; usually, not all outstanding bonds are redeemed off - market; off - market redemption does not necessarily trigger an immediate substantial default, but for entities with a large scale of outstanding bonds, the probability of subsequent substantial default is relatively high. However, for central enterprises with strong shareholder backgrounds, the probability of default is relatively small [20][21][22]. 3.3 How to View the "Off - market Redemption" of AVIC Industry Finance? 3.3.1 AVIC Industry Finance's Announcement on Converting its Bonds to "Off - market Redemption" - AVIC Industry Finance announced that it plans to hold a bondholders' meeting to discuss bond cancellation and then convert to off - market redemption. It has also promised to ensure timely and full repayment without default [24]. 3.3.2 Some Bonds in the AVIC Industry Finance System Face Certain Upward Pressure on Valuation - Since the announcement of the proposed off - market delisting on April 1, as of April 7, the valuations of AVIC Industry Finance's outstanding and non - suspended inter - bank bonds have generally increased by about 30bp [27]. - Among other bond - issuing enterprises in the AVIC Industry Finance system, the valuations of ordinary credit bonds of AVIC Leasing have increased significantly, while other entities are relatively stable. The increase in AVIC Leasing's valuation may be related to its large bond outstanding and the uncertainty of shareholder support [28]. 3.3.3 What Key Points are Worth Paying Attention to in the Future? - For AVIC Industry Finance investors, there is currently no default risk in the subsequent off - market redemption, but they need to pay attention to the details of the final redemption plan, such as the specific redemption time and price. There are also issues such as limited liquidity during the period from bond suspension to delisting and redemption, uncertainty about whether all bonds will be redeemed early, and potential losses in capital gains [32]. - The off - market redemption event of AVIC Industry Finance, a central enterprise subsidiary, may trigger the market to actively pay attention to the credit risks of similar non - bank financial bonds of central enterprise subsidiaries. In the future, the credit risk analysis of such bonds may need to be more based on the enterprise's fundamentals. Although the default risk of non - bank financial bonds of central enterprise subsidiaries is controllable in the short term, more attention should be paid to their credit risks [5][35].