1. Report Industry Investment Rating No information provided in the report. 2. Core Viewpoints of the Report The report offers a comprehensive analysis of the primary and secondary market conditions of local government bonds in the week ending May 26, 2025, including net financing, issuance terms, issuance spreads, and trading volume [1]. 3. Summary by Relevant Catalogs 3.1 Primary Market Issuance Situation - **Net Financing**: The issuance volume of local government bonds increased this week, but the net financing decreased. The total issuance volume was 248.5 billion yuan, with a repayment volume of 105.9 billion yuan, resulting in a net financing of 142.6 billion yuan [1][9]. - **Issuance Terms**: The proportion of long - term bond issuance decreased. The 10 - year bonds had the highest issuance proportion (33%), and bonds with a term of 10 years and above accounted for 75%, a decrease from last week [1][12]. - **Debt - Resolution - Related Local Bonds**: Special refinancing bonds worth 25.1 billion yuan were issued this week. As of now, 33 regions have disclosed plans to issue special bonds for replacing hidden debts, totaling 1.6291 trillion yuan [2][15]. - **Issuance Spreads**: The weighted average issuance spread of local government bonds narrowed compared to last week, reaching 11bp. The 30 - year bonds had the highest spread at 18.4bp. Except for the 1 - year bonds, the spreads of other terms narrowed [1][25]. - **Fund - Raising Allocations**: The funds raised from new special bonds in 2025 have mainly been allocated to cold - chain logistics, municipal and industrial park infrastructure (33%), transportation infrastructure (21%), affordable housing projects (12%), and social undertakings (12%). The proportion of land reserve allocations increased by 7.6% compared to 2024 [2][28]. - **Issuance Plan**: As of the end of this week, 34 regions have disclosed their local government bond issuance plans for the second quarter of 2025. Considering the actual issuance volume in April, the total planned issuance volume for the second quarter is expected to reach 2.2 trillion yuan, with 672.7 billion yuan and 855.1 billion yuan planned for May and June respectively [3][30]. 3.2 Secondary Market Situation - **Secondary Spreads**: The 30 - year and 15 - year local government bonds had favorable secondary spreads. The 30 - year and 15 - year bonds had relatively high spreads of 20.1bp and 18.9bp respectively. The 30 - year bond's secondary spread was at a high historical percentile of 89% over the past three years [4][35]. - **Trading Volume**: The trading volume and turnover rate of local government bonds decreased this week. Anhui, Sichuan, and Zhejiang had relatively high turnover rates. The total trading volume was 436 billion yuan, and the turnover rate was 0.86%. Sichuan, Zhejiang, and Anhui had large trading volumes of 42.6 billion yuan, 40.4 billion yuan, and 35.6 billion yuan respectively, and their turnover rates were all above 1.6% [5][40].

Group 1 - The core viewpoint of the article is that local government bond issuance may accelerate in the second quarter of 2025, but the impact on the market is expected to be relatively limited due to monetary policy coordination [2][23][28] - In the first quarter of 2025, the issuance pace of new bonds was slower compared to the same period in 2023, but the progress of replacing hidden debts was faster, with over two-thirds of the 2 trillion yuan quota already issued [2][11] - The second quarter is expected to see a significant increase in the issuance of special bonds, particularly those with a maturity of 10 years or more, driven by growth stabilization demands and policy guidance [2][13][16] Group 2 - Banks remain the main investors in local government bonds, but there has been a noticeable increase in the willingness of broad-based funds to allocate to these bonds since October 2023, with their investment share rising from 5.44% to 8.54% by February 2025 [3][28] - Different types of institutions have varying preferences for bond maturities, with insurance companies favoring long-term bonds (10 years and above), while fund companies have shown a tendency to chase market trends and are now focusing on bonds with maturities of 7 years and above [3][32] Group 3 - Local government bonds currently offer high value for both allocation and trading, with their liquidity being weaker than that of treasury bonds, leading to a lag in market performance [4][38] - The current yield spread between local government bonds and treasury bonds indicates a favorable price-performance ratio, with the spread for 10-year bonds reaching around 30 basis points, suggesting good investment opportunities [5][43][47] - The article recommends focusing on bonds with maturities of 5 years and above, particularly 15-year bonds, which exhibit strong value for allocation [6][43]