Core Viewpoint - The article discusses the narrowing of the yield spread between local government bonds with maturities over 7 years and national government bonds, indicating a shift in the bond market dynamics and a potential increase in local bond issuance in the coming week [2] Group 1: Bond Market Dynamics - The yield spread between local government bonds with maturities over 7 years and national government bonds has decreased, suggesting a change in investor sentiment and market conditions [2] - The upcoming week is expected to see a significant acceleration in local government bond issuance, which may impact overall market liquidity and investor strategies [2] Group 2: Local Government Bond Issuance - The article highlights that local government bonds are likely to be issued at a faster pace, reflecting the need for funding in various local projects and initiatives [2] - This increase in issuance may lead to a more competitive environment for investors, as they assess the risk and return profiles of these bonds compared to national government bonds [2]

Group 1 - The report indicates that the central bank's net investment in government bonds in October 2025 was 20 billion yuan, which is lower than the monthly net purchases in 2024, which ranged from 100 billion to 300 billion yuan [1][8] - Since June 2025, major banks have significantly increased their net purchases of government bonds with maturities of 3 years or less, with monthly net purchases exceeding 230 billion yuan [1][8] - The liquidity outlook remains relatively loose, with a weekly net payment of 369.2 billion yuan in government bonds, the highest in two months, despite low maturity amounts and the absence of tax periods [2][9] Group 2 - The sentiment in the secondary market for local government bonds has been positive since late October, with insurance and fund institutions being the main net buyers, particularly in the 15-20 year and 3-5 year maturities [2][18] - The issuance of special refinancing bonds is currently less than one-fifth of the planned 500 billion yuan, with a focus on maturities that may widen the spread between local government bonds and national bonds [3][18] - The report highlights that the newly issued bonds in November have an implied tax rate of 3% or below, with many bonds deviating significantly from secondary market pricing [3][18]

Report Summary 1. Investment Rating The provided content does not mention the industry investment rating. 2. Core View The report suggests that there is still room for the narrowing of local government bond spreads. It analyzes the primary and secondary market conditions of local government bonds, including net financing, issuance terms, issuance spreads, capital investment directions, and trading volumes [1]. 3. Summary by Directory 3.1 Primary Market Issuance Situation - **Net Financing**: This week, local government bond issuance reached 270.7 billion yuan, with net financing increasing by 12.2 billion yuan compared to the previous week. The net financing was 178 billion yuan, including 17 billion yuan in new general bonds, 154.9 billion yuan in new special bonds, 77.3 billion yuan in refinancing general bonds, and 21.5 billion yuan in refinancing special bonds [1][9]. - **Issuance Terms**: The issuance proportion of 10 - year local government bonds was the highest at 24%, and the proportion of 10 - year and above bonds was 63%, showing a decline compared to last week. The issuance proportion of 5 - year local government bonds increased significantly, while that of 30 - year bonds decreased by about 9 percentage points [1][13]. - **Debt - Resolution - Related Local Government Bonds**: This week, 24.6 billion yuan of special refinancing bonds were issued. In 2025, 33 regions have disclosed plans to issue a total of 2.0536 trillion yuan in special bonds to replace hidden debts, with Jiangsu, Guizhou, Hunan, and Henan having 251.1 billion yuan, 132.4 billion yuan, 128.8 billion yuan, and 116.1 billion yuan respectively [2][17]. - **Issuance Spreads**: The weighted average issuance spread of local government bonds this week was 17.5bp, lower than last week. The 15 - year local government bonds had the highest weighted average issuance spread at 22.8bp. Except for 5 - year and 30 - year bonds, the weighted average issuance spreads of other terms narrowed. Inner Mongolia, Guangxi, and Shandong had weighted average issuance spreads exceeding 20bp [2][25]. - **Fund - Raising Investment Directions**: As of the end of this week, the main investment directions of new special bond funds raised since 2025 were cold - chain logistics, municipal and industrial park infrastructure construction (29%), transportation infrastructure (17%), land reserve (16%), affordable housing projects (12%), and social undertakings (11%). In 2025, the proportion of land reserve investment increased by 16.3% compared to 2024, while that of cold - chain logistics, municipal and industrial park infrastructure construction decreased by 8.0% [2][29]. - **Issuance Plan**: As of the end of this week, 33 regions have disclosed their local government bond issuance plans for the fourth quarter of 2025. Considering the actual issuance in October, the total planned issuance in the fourth quarter is about 1.3 trillion yuan, with 705 billion yuan in November. Next week, 91.6 billion yuan of local government bonds are planned to be issued, with a repayment of 127.6 billion yuan and a net repayment of 36 billion yuan, a decrease of 213.9 billion yuan compared to the previous week [3][32]. 3.2 Secondary Market Situation - **Secondary Spreads**: This week, the secondary spreads of 3 - year and 20 - year local government bonds were relatively high, and the secondary spreads of all terms widened. The secondary spreads of 3 - year, 20 - year, and 15 - year bonds reached 19.6bp, 18.7bp, and 18.5bp respectively. In terms of regions, the secondary spreads of 3 - 5 - year local government bonds in each region were relatively high, ranging from 18 - 21bp, and the 15 - 20 - year bonds in medium - level regions also had relatively high secondary spreads [5][36]. - **Trading Volume**: This week, both the trading volume and turnover rate of local government bonds increased compared to last week. Hebei and Guizhou had relatively high turnover rates. The trading volume of local government bonds reached 385.3 billion yuan, with a turnover rate of 0.72%. Hebei had a large trading volume of 42.9 billion yuan, and the turnover rates of Hebei and Guizhou were the highest, reaching 1.8% and 1.7% respectively [5][41].

1. Report Industry Investment Rating - Not provided in the given content 2. Report's Core View - The report analyzes the primary and secondary market conditions of local government bonds in 2025, including net financing, issuance terms, issuance spreads, secondary spreads, trading volume, and turnover rate, and also provides information on debt - resolution - related bonds and issuance plans [1][5] 3. Summary by Relevant Catalogs 3.1 Primary Market Conditions - **Net financing**: This week, local government bonds issued 196.1 billion yuan, with a repayment of 73.6 billion yuan and a net financing of 122.5 billion yuan. The issuance volume and net financing increased. Next week, the planned issuance is 107.2 billion yuan, with a repayment of 9.1 billion yuan and a net financing of 98.1 billion yuan, a decrease of 24.4 billion yuan compared to this week [1][3] - **Issuance term**: The 30 - year local government bond issuance accounted for the highest proportion (38%) this week, and the proportion of 10 - year and above issuances was 84%, an increase compared to last week. The 30 - year issuance proportion increased by about 16 percentage points, while the 7 - year and 10 - year proportions decreased by about 12 and 11 percentage points respectively [1][12] - **Debt - resolution - related local government bonds**: This week, special refinancing bonds issued 1.14 billion yuan. In 2025, 33 regions have disclosed plans to issue special bonds for replacing hidden debts, totaling 1,995.7 billion yuan. Special special bonds issued 5.06 billion yuan this week, and as of the end of this week, the disclosed and issued scales of special special bonds in 2025 are 1,204.9 billion and 1,201.2 billion yuan respectively [2][16] - **Issuance spread**: This week, the weighted average issuance spread of local government bonds was 23.9bp, widening compared to last week. The 15 - year local government bond had the highest weighted average issuance spread at 27.6bp. The weighted average issuance spreads of 7 - year and 10 - year local government bonds narrowed, while those of other terms widened. There was significant regional differentiation [2][25] - **Fund - raising direction**: As of the end of this week, the main investment directions of newly - added special bonds in 2025 were cold - chain logistics, municipal and industrial park infrastructure construction (29%), transportation infrastructure (18%), land reserve (14%), affordable housing projects (12%), and social undertakings (12%). The proportion of land reserve investment increased by 14.2% compared to 2024, while that of cold - chain logistics, municipal and industrial park infrastructure construction decreased by 7.5% [2][30] - **Issuance plan**: As of the end of this week, 35 regions have disclosed their local government bond issuance plans for the third quarter of 2025, with an expected total issuance of 2.9 trillion yuan. The planned issuances of new bonds and refinancing bonds in the third quarter are 1,745 billion and 1,176 billion yuan respectively. Some regions have disclosed their fourth - quarter issuance plans, totaling 844.5 billion yuan, with 540.6 billion yuan in October [3][33] 3.2 Secondary Market Conditions - **Secondary spread**: This week, the secondary spreads of 5 - year and 10 - year local government bonds were relatively high, and the secondary spreads of local government bonds of all terms widened. The 5 - year and 10 - year secondary spreads reached 16.1bp and 15.7bp respectively. The historical quantile of the 5 - year secondary spread in the past 3 years was relatively high at 68%. Regionally, the 3 - 5 - year secondary spreads in each region were relatively high, and the 10 - 15 - year and 15 - 20 - year secondary spreads in medium - strength and strong regions were also relatively high [5][37] - **Trading volume and turnover rate**: This week, the trading volume and turnover rate of local government bonds increased compared to last week. Qinghai had a relatively high turnover rate. The trading volume this week reached 489.1 billion yuan, and the turnover rate was 0.92%. Guangdong, Hunan, and Shandong had large trading volumes, and Qinghai had the highest turnover rate at 4.0%, higher than Xinjiang Production and Construction Corps' 3.7% [5][43]

Report Industry Investment Rating No relevant information is provided in the content. Core View of the Report - Current period's local government bond issuance and net financing both increased compared to the previous period, and it is expected that both will rise significantly in the next period. As of July 18, 2025, the cumulative issuance progress of new general bonds and new special bonds is faster than that of 2024 but slower than that of 2023. The issuance of new local government bonds accelerated in the current period and is expected to continue to speed up in the next period [2]. - The planned issuance scale of local government bonds from July to September 2025 is 286.17 billion yuan, including 161.1 billion yuan of new special bonds. As of July 18, 2025, 31 regions have disclosed their planned issuance scales [2]. - In the current period, 102.7 billion yuan of special new special bonds were issued, but no special refinancing bonds for replacing implicit debts were issued. As of July 18, 2025, the cumulative issuance of special new special bonds reached 622.2 billion yuan, and the issuance progress of special refinancing bonds for replacing implicit debts reached 91.2% [2]. - In the current period, the spreads between 10Y and 30Y local government bonds and treasury bonds both narrowed, and the weekly turnover rate increased month - on - month. Currently, the spread - mining space for local government bonds is shrinking. For institutions such as bank self - operations, insurance, and securities firm self - operations, local government bonds have certain allocation value; for institutions such as public funds, local government bonds still have trading value [2]. Summary According to the Directory 1. The current period's local government bond issuance volume increased, and the weighted issuance term lengthened - The total issuance/net financing of local government bonds in the current period (July 14 - 20, 2025) was 251.183 billion yuan/152.933 billion yuan (compared to 231.79 billion yuan/107.789 billion yuan in the previous period), and it is expected to be 375.754 billion yuan/292.39 billion yuan in the next period (July 21 - 27, 2025) [2][9]. - The weighted issuance term of local government bonds in the current period was 14.57 years, longer than 14.17 years in the previous period (July 7 - 13, 2025) [2]. - As of July 18, 2025, the cumulative issuance of new general bonds/new special bonds accounted for 61.7% and 54.3% of the annual quota respectively, and considering the expected issuance in the next period, it would be 64.6% and 59.0%. The cumulative issuance progress in 2024 was 48.8%/40.2%, and in 2023 it was 62.7%/57.6% [2][18]. - As of July 18, 2025, the cumulative issuance of special new special bonds was 622.2 billion yuan (with 102.7 billion yuan issued in the current period); the cumulative issuance of special refinancing bonds for replacing implicit debts was 1824.6 billion yuan (0 billion yuan issued in the current period), and the issuance progress reached 91.2%, with 24 regions such as Zhejiang having completed all issuances [2][20]. 2. In the current period, the spreads between 10Y and 30Y local government bonds and treasury bonds both narrowed, and the weekly turnover rate increased month - on - month - As of July 18, 2025, the spreads between 10 - year and 30 - year local government bonds and treasury bonds were 10.48BP and 16.15BP respectively, narrowing by 0.99BP and 0.44BP compared to July 11, 2025, and were at the 6.10% and 63.20% historical quantiles since 2023 [2]. - The weekly turnover rate of local government bonds in the current period was 0.74%, up from 0.71% in the previous period. The yields and liquidity of 20 - 30Y local government bonds in regions such as Yunnan, Inner Mongolia, and Hunan were better than the national average [2].