Group 1 - The investment in local government bonds is gaining momentum, combining both allocation and trading opportunities, with the market increasingly focusing on the investment cost-effectiveness of local bonds since 2023 [1][12][13] - The total scale of local government bonds has grown significantly, from 1.16 trillion yuan at the end of 2014 to an expected 50 trillion yuan by 2025, with an average annual growth rate of approximately 45% [12][18] - The demand for local bonds is expanding, with commercial banks, broad funds, insurance self-managed, and securities firms being the four main holding institutions, while the proportion held by commercial banks has been gradually decreasing [3][25][32] Group 2 - The supply of local bonds is characterized by three main features: increasing average issuance size, lengthening maturity structure, and stable regional structure [2][16][21] - The average issuance size of local bonds has risen significantly, with the average size reaching 66 billion yuan in early 2025, indicating a more dispersed holding structure that facilitates active trading [16][18] - The proportion of local bonds with a remaining maturity of 10 years or more has increased from 4.1% at the end of 2019 to 36.0% by the first quarter of 2025, reflecting a shift towards longer-term investments [2][22] Group 3 - The pricing rules in the secondary market for local bonds are closely tied to government bonds, with the yield spread between local and government bonds exhibiting a mean-reverting characteristic [4][12] - Historical analysis shows that the widening spread between local and government bonds can occur due to concentrated supply pressures or during bullish market phases [4][12] - The investment experience of holding local bonds compared to government bonds shows that local bonds can provide higher excess returns, especially for 10-year and 30-year maturities [6][7][12]