Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The high - pressure situation of implicit debt supervision remains unchanged, emphasizing the prevention of "risks from risk disposal". The audit report reveals over a hundred billion yuan of irregular use of special bonds and the persistence of new implicit debt since March 2023, highlighting the need for continuous improvement of debt management mechanisms [5][7][9]. - Guangxi will spare no effort to support Liuzhou in debt resolution, aiming to balance debt reduction and high - quality development [5][10]. Summary by Directory 1. News Review - **Irregular Use of Special Bonds and New Implicit Debt**: The audit report shows that irregularities such as illegal borrowing, false reporting of expenditures, and idle misappropriation of special bonds still exist, involving over a thousand billion yuan. New implicit debt has also emerged since March 2023, along with irregularities like irregular fund collection by urban investment companies and false debt resolution. This indicates the need to improve the regular supervision system for special bonds and address deep - seated institutional issues in debt management [5][7][9]. - **Guangxi's Support for Liuzhou's Debt Resolution**: On June 25, Guangxi held a meeting to support Liuzhou in debt resolution, emphasizing the balance between debt reduction and high - quality development. Resolving Liuzhou's debt is a top priority for the region [10]. - **Early Redemption of Bonds by Urban Investment Enterprises**: Twenty urban investment enterprises redeemed bond principal and interest in advance this week, involving 21 bonds with a total scale of 40.86 billion yuan, a decrease of 4.51 billion yuan from the previous value. Most of these enterprises are from the eastern region, and the majority of their credit ratings are AA [12]. 2. Issuance of Local Government Bonds and Urban Investment Enterprise Bonds - **Local Government Bonds**: This week, the issuance scale and net financing of local government bonds increased, while the issuance interest rate decreased and the spread narrowed. As of now, the issuance progress of new special bonds this year is less than 40%, and the local debt replacement progress has reached 87%. A total of 60 local bonds were issued this week, with a scale of 261.753 billion yuan, and the net financing increased by 167.346 billion yuan to 124.334 billion yuan. The weighted average issuance interest rate dropped by 9.85BP to 1.72%, and the weighted average issuance spread narrowed by 3.37BP to 10.18BP [14]. - **Urban Investment Bonds**: The issuance scale of urban investment bonds increased this week, but the net financing turned negative. The issuance interest rate rose, and the spread widened. A total of 197 urban investment bonds were issued, with a scale of 128.875 billion yuan, an increase of 1.79% from the previous value. The net financing decreased by 445.82 billion yuan to - 32.634 billion yuan. The average issuance interest rate was 2.25%, up 1.74BP from the previous value, and the issuance spread was 77.89BP, widening by 4.95BP [17]. 3. Trading of Local Government Bonds and Urban Investment Enterprise Bonds - **Funding Situation**: The central bank conducted 960.3 billion yuan of reverse repurchases in the open market this week, with 858.2 billion yuan of reverse repurchases maturing, resulting in a net withdrawal of 79.9 billion yuan. Short - term funding rates mostly rose [24]. - **Urban Investment Rating Adjustment**: On June 18, 2025, Dagong Global downgraded the credit rating of Guizhou Guiyang Economic and Technological Development Zone Guihe Investment Development Co., Ltd. from AA to AA - and its bond rating from AA to AA - [24]. - **Credit Events and Regulatory Penalties**: No urban investment credit risk events occurred this week [24]. - **Local Government Bonds**: The trading volume of local government bonds decreased by 12.75% to 544.437 billion yuan, and the maturity yields generally declined, with an average decline of 4.78BP [24]. - **Urban Investment Bonds**: The trading volume of urban investment bonds increased by 15.88% to 378.924 billion yuan, and the maturity yields generally declined, with an average decline of 5.33BP. The spreads of 1 - year and 3 - year AA+ urban investment bonds widened, while that of 5 - year AA+ urban investment bonds narrowed [25]. - **Abnormal Trading of Urban Investment Bonds**: Under the broad - based criteria, 24 urban investment entities had 28 abnormal bond trades, with an increase in the number of entities, bonds, and trading times [25]. 4. Important Announcements of Urban Investment Enterprises - Forty - seven urban investment enterprises announced changes in senior management, legal representatives, directors, supervisors, etc., as well as changes in controlling shareholders, actual controllers, equity/asset transfers, suspected disciplinary violations, changes in the use of raised funds, and external guarantees [28].

Summary of Key Points from Conference Call Records Industry Overview - The conference call primarily discusses the credit bond market, particularly focusing on the second quarter of 2025 and the dynamics of local government financing platforms [1][2][3]. Core Insights and Arguments - **Credit Bond Market Dynamics**: The second quarter is expected to experience a mismatch in supply and demand for credit bonds, influenced by seasonal factors and tightening policies. The demand side benefits from the expansion of wealth management products and the development of credit ETFs, suggesting that credit bonds may outperform interest rate bonds [1][4]. - **Investment Strategy**: It is recommended to extend the duration of credit bonds to 3-5 years to achieve higher yields, while also being cautious of market volatility risks due to tariff disturbances since April [1][5]. - **Technology Innovation Bonds**: Despite being labeled as "technology innovation" bonds, most issuers do not possess true innovation attributes. The majority serve mature quality entities transitioning, with state-owned enterprises dominating and private enterprises having lower participation [1][6][9]. - **Use of Proceeds**: Funds raised through technology innovation bonds are primarily used for repaying old debts and enhancing liquidity, with a low proportion directed towards equity fund investments and project construction [1][10]. - **Pricing and Liquidity**: The pricing gap between technology innovation bonds and ordinary credit bonds is minimal, with private enterprise bonds showing a premium of 10-15 basis points. Recent liquidity levels are comparable to the overall credit bond sector [1][12]. Additional Important Content - **Future Development of Technology Innovation Bonds**: The future direction includes supporting small and medium enterprises by quality entities and fostering high-yield characteristics in small enterprises' technological innovations. The involvement of banks may compress the valuation of technology innovation bonds, similar to trends observed in the green loan market [1][13][14]. - **Local Government Financing Platforms**: The management of local government debt is characterized by a simultaneous increase in central leverage and a decrease in local leverage, with strict regulation on hidden debts. The supply of urban investment bonds may be tight due to these regulatory measures [2][17][21]. - **Market Performance of Urban Investment Bonds**: Urban investment bonds are expected to have limited new issuance, with a focus on refinancing existing debts. The market for these bonds remains constrained due to regulatory scrutiny and the need for local governments to manage their financing carefully [21][22]. This summary encapsulates the critical insights and trends discussed in the conference call, providing a comprehensive overview of the credit bond market and local government financing dynamics.