Group 1 - The 0-4 government bond ETF (159816) has seen a 4 basis points increase, marking its sixth consecutive rise, with the latest price at 113.89 yuan [1] - The ETF experienced a trading volume of 26.68 billion yuan, indicating active market participation with a turnover rate of 143.03% [1] - The bond market's yield trends in the first half of 2025 were influenced by tightening liquidity, risk aversion, and tariff negotiations, initially rising and then falling [1] Group 2 - The 10-year government bond yield briefly fell below 1.60% at the beginning of the year but later adjusted to around 1.90% due to central bank tightening and equity market pressures [1] - From April to June, the yield fluctuated around 1.65% as a result of ongoing tariff negotiations and a series of growth-stabilizing policies from the central bank [1] - As of the end of June, the 10-year government bond yield was reported at 1.65%, down 3 basis points from the end of 2024 [1] Group 3 - According to Shenwan Hongyuan Securities, the bond market remains in a bullish window, but the potential for profit is limited, suggesting a continuation of the strategy to exploit yield spreads in the short term [1] - Local government bonds currently offer a high cost-performance ratio, but a breakthrough in interest rates requires new catalysts such as central bank bond purchases or reductions in reserve requirements [1] Group 4 - The 0-4 government bond ETF closely tracks the CSI 0-4 year local government bond index, which includes non-directional local government bonds with a remaining maturity of 4 years or less [2] - The index is calculated using market capitalization weighting to reflect the overall performance of local government bonds within the specified maturity [2] - The 0-4 government bond ETF is the only short-duration local government bond ETF in the market, suitable for investors as a cash management tool [2]

Group 1 - The local government bond market in China has entered a new expansion cycle since 2025, with the total number of local government bonds reaching 12,535 and a balance of approximately 51 trillion yuan, reflecting an 8% increase compared to the end of 2024 [1] - In 2025, a total of 832 local government bonds were issued, amounting to 4.46 trillion yuan, with a significant year-on-year increase and an advanced issuance pace [1] - The current low-interest-rate environment, driven by policy expansion and monetary easing, has enhanced the investment value of local bonds, with increasing turnover rates and improving liquidity [1] Group 2 - As of June 6, 2025, the yield spread between short-term local bonds and government bonds has widened by nearly 10 basis points, with 2Y and 3Y local bonds showing spreads exceeding 15 basis points, placing them in the top 60% since 2022 [2] - The funding rate remains around 1.4%, with short-term local bonds offering positive yield spreads, making them an attractive choice under the current monetary easing expectations [2] Group 3 - There are currently four local bond ETFs in the market, including two managed by Penghua Fund, which cater to different investor needs with varying durations [3] - The Penghua 5-Year Local Bond ETF focuses on medium to long-term local bonds, offering higher yield potential with lower credit risk, while the Penghua 0-4 Year Local Bond ETF targets short-term local bonds, providing low volatility and stable returns [3] Group 4 - Both Penghua local bond ETFs support T+0 trading and can be used for pledged financing, with a low annual comprehensive fee rate of only 0.2% [4] - The trading activity of these ETFs has been robust, with average weekly trading volumes of 1.5 billion yuan and 2.1 billion yuan, and daily turnover rates of 35% and 117% respectively [4] - The investment team at Penghua Fund has extensive experience, with an average of over 8 years in the industry, and is well-equipped to manage various market conditions [4]

Group 1: Report Highlights - The report is the first part of the "Local Government Bond Investment Guide" series, observing the investment value of local government bonds from the perspectives of primary market issuance characteristics and secondary market trading characteristics [4]. - In recent years, the issuance rhythm of local government bonds has shown a significant end - of - month rush, with a gradually market - oriented pricing mechanism, anchoring the Treasury bond yield and the interest rate being close to the bidding lower limit, but there are "flying" phenomena in a few regions. - Local government bonds show anti - decline attributes during the adjustment period, and their allocation value is prominent in the interest rate downward cycle. There are obvious floating profit differentiations among regions, with smaller arbitrage spaces in economically developed regions and higher probabilities of floating profits in special refinancing bonds and regions with low "flying" rates [4]. Group 2: Report Industry Investment Rating - No investment rating information is provided in the report. Group 3: Core Views - The issuance rhythm of local government bonds is highly coordinated with policy guidance. From 2018 - 2024, the completion rate of the Ministry of Finance's guidance on the issuance time of special bonds exceeded 95%, and in years with strong policy statements, the end - of - month issuance completion rate was close to 100%. There is a significant end - of - month concentrated issuance pattern, with the average issuance volume in the second half of each month from 2021 - 2024 accounting for 75%, and in most months, the issuance volume in the last five days accounts for over 25% of the monthly total [6]. - The pricing mechanism of local government bonds has evolved over four key stages in the past decade. Currently, 89.5% of the local government bonds issued in 2024 still use the Treasury bond yield as the sole pricing benchmark, and the "Treasury bond + local government bond yield curve" dual - anchor model piloted in Shenzhen provides a practical sample for regional innovation. Most local government bonds are issued at the lower limit of the bidding range, with only a few showing significant "flying" phenomena. The term spread structure is significant, with the issuance spread of bonds over 10 - year terms being 8bp higher on average than that of 2 - 7 - year varieties from December 2024 to January 15, 2025 [7]. - Different types of institutions have different allocation strategies. Commercial banks' comprehensive returns on general and special bonds are slightly lower due to capital occupation for credit risk weighting, while public funds are more competitive without such constraints and enjoying tax preferences. Institutions' operations during adjustment and non - adjustment periods are significantly different, and the post - listing valuations of general and special bonds are still differentiated [8]. - Local government bonds show unique risk - return characteristics in the interest rate cycle. Their defensive attributes were stronger than Treasury bonds from October 2022 to September 2023, but their offensive attributes increased and the volatility was higher than Treasury bonds since September 2023. In 2024, local government bonds had the smallest adjustment range and the strongest anti - decline ability during multiple adjustments, and there were significant differences in floating profits and losses among regions. In 2024, the proportion of coupon income of short - end bonds decreased, and the proportion of riding income increased significantly [9]. Group 4: Summaries by Directory Local Debt Issuance Rhythm Follows Guidance - The issuance progress of new special bonds each year generally meets the requirements of the guidance, and most of the issuance work is completed before the guiding month. In 2018 - 2021, the actual issuance completion rate was mostly higher than 95% by the end of the guiding month. In 2024, the issuance progress of about 290 billion yuan of special bonds was close to 100% by the end of October [18]. - There is a significant end - of - month rush in the issuance of new special bonds. From 2021 - 2024, the issuance volume in the second half of the month was significantly higher than that in the first half. In 2024, the second - half issuance accounted for 79% of the annual total, and for local government bonds in general, there was a peak supply at the end of the month, with the issuance proportion from the 26th to the 31st of each month in 2024 accounting for more than 25% of the monthly total [23]. Gradual Marketization of Local Debt Primary Pricing - The pricing of local government bond issuance has gradually moved away from the fixed spread model and towards a more market - oriented direction, going through four stages: the market exploration stage (2015 - 2018), the administrative spread constraint stage (2018 - 2021), the lower - limit breakthrough pilot stage (2021 - 2022), and the yield curve anchoring stage (2022 - present). Currently, the overall spread has gradually declined to below 10bp [7]. - Most bonds are still anchored to the Treasury bond yield curve, and only Shenzhen bonds use a dual - pricing mechanism. Among the 200 local government bond sub - samples issued in 2024, 89.5% are anchored to a single curve, and the upper - limit expression of most bonds shows a certain concentration, with the proportion of bonds with an upper limit of 30% above the Treasury bond yield average being the largest [30]. - In 2024, the range of the arithmetic mean of primary spreads among regions could exceed 7bp. The "flying" degree varies among regions, with some regions having a high average "flying" index and some economically developed regions having no "flying" phenomenon. There have also been cases of postponed bond issuances [40]. - China's local government bonds mainly use Dutch auctions. High - flying - index bonds generally have weak demand but may have extreme heat due to liquidity premiums, low - flying - index bonds have stable demand, and medium - flying - index bonds have highly volatile demand due to divided subscription expectations [45]. - From December 2024 to January 15, 2025, the issuance spreads of local government bonds over 10 - year terms increased significantly, while those of 2 - 7 - year bonds decreased slightly. The primary spread of local government bonds is related to the Treasury bond yield and its own liquidity premium [52]. Differentiated Institutional Behaviors and Market Liquidity Structure - Commercial banks need to account for capital occupation costs when investing in bonds, resulting in lower comprehensive returns on general and special bonds. Public funds are more competitive without such constraints and enjoying tax preferences [67]. - In the local government bond market, insurance companies continuously increase their holdings during non - adjustment periods and increase their holdings counter - cyclically during adjustment periods. Banks, funds, and securities companies have different trading behaviors during adjustment and non - adjustment periods, and the net purchases of each institution during adjustment periods are significantly differentiated [71]. - Theoretically, the yield of special bonds should be higher than that of general bonds. After listing, the valuations of general and special bonds are still differentiated, indicating that the market has implicit pricing differences for factors such as liquidity [79]. Evolution of Risk - Return Characteristics and Strategy Selection - From 2022 - 2023, local government bonds showed stronger defensive attributes than Treasury bonds in the first bull - bear market but stronger offensive attributes in the second one. In 2024, local government bonds had a smaller adjustment range and stronger anti - decline ability during multiple adjustments, and there were significant differences in floating profits and losses among regions [9]. - In 2024, the proportion of coupon income of short - end bonds decreased, and the proportion of riding income increased significantly, reflecting the decline in interest rates and the magnification of the duration effect [9].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The current issuance of local government bonds is decreasing, and the weighted issuance term is shortening. The issuance and net financing of local government bonds are expected to decline in the next period due to the holiday effect. The current local government bonds have both allocation and trading value, and it is a good time to invest in them [2]. - The issuance of new local government bonds has not accelerated yet. As of April 25, 2025, the cumulative issuance progress of new general bonds and new special bonds is lower than that in 2023 but higher than that in 2024 [2]. - The planned issuance scale of local government bonds in the second quarter of 2025 is 223.35 billion yuan, with relatively even monthly planned issuances [2]. - The spreads between 10 - year and 30 - year local government bonds and treasury bonds have narrowed, and the weekly turnover rate has decreased. The spreads are still at relatively high historical quantiles, indicating high cost - effectiveness [2]. 3. Summary According to the Directory 3.1 This period, the issuance volume of local government bonds has decreased, and the weighted issuance term has shortened - In the current period (April 21 - April 27, 2025), the total issuance/net financing of local government bonds is 191.123 billion yuan/162.512 billion yuan (the previous period was 200.617 billion yuan/122.718 billion yuan). The next period (April 28 - May 4, 2025) is expected to issue/have a net financing of 93.092 billion yuan/92.697 billion yuan. The weighted issuance term of local government bonds in the current period is 13.24 years, shorter than the previous period's 19.08 years [2][8][9]. - As of April 25, 2025, the cumulative issuance of new general bonds/new special bonds accounts for 36.9% and 25.8% of the annual quota respectively. Considering the expected issuance in the next period, it will be 37.8% and 27.1%. The cumulative issuance progress in 2024 was 32.0%/16.9% and 34.5%/18.4%, and in 2023 it was 44.2%/38.0% and 45.9%/40.2% [2][13][16]. - As of April 25, 2025, 31 regions have disclosed a total planned issuance scale of 223.35 billion yuan for local government bonds in the second quarter of 2025 (81.96 billion yuan, 67.04 billion yuan, and 74.52 billion yuan from April to June respectively), including 107.97 billion yuan for new special bonds (31.3 billion yuan, 39.44 billion yuan, and 37.23 billion yuan from April to June respectively). The issuance in the same regions in the previous year was 164.02 billion yuan and 77.96 billion yuan, and the national issuance in the previous year was 191.89 billion yuan and 85.93 billion yuan [2][24][25]. - In the current period, 9 billion yuan of special new special bonds were issued, and 49.6 billion yuan of special refinancing bonds for replacing hidden debts were issued. As of April 25, 2025, the cumulative issuance of special new special bonds is 143.7 billion yuan (9 billion yuan in the current period); the cumulative issuance of special refinancing bonds for replacing hidden debts is 1,593.3 billion yuan (49.6 billion yuan in the current period), with an issuance progress of 79.7%. Seventeen regions such as Zhejiang have completed the issuance (no new regions in the current period) [2][20]. 3.2 This period, the spreads between 10 - year and 30 - year local government bonds and treasury bonds have narrowed, and the weekly turnover rate has decreased - As of April 25, 2025, the spreads between 10 - year and 30 - year local government bonds and treasury bonds are 25.94BP and 21.24BP respectively, narrowing by 1.13BP and 2.34BP compared to April 18, 2025 (27.07BP and 23.58BP on April 18, 2025), and are at the 81.6% and 86.6% historical quantiles since 2023, still having high cost - effectiveness [2][30][31]. - The weekly turnover rate of local government bonds in the current period is 0.80%, lower than the previous period's 0.93%. The yields and liquidity of 7 - 10Y local government bonds in regions such as Guizhou, Inner Mongolia, and Yunnan are better than the national average [2][36].

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]

Core Viewpoint - The 0-4 Year Local Government Bond ETF (159816) has shown a slight increase in value and significant trading activity, indicating a positive trend in the local bond market supported by ample liquidity from the central bank [1][2]. Group 1: Market Performance - As of April 16, 2025, the 0-4 Year Local Government Bond ETF rose by 0.03%, with a latest price of 113.27 yuan [1]. - Over the past six months, the ETF has accumulated a total increase of 1.17% [1]. - The ETF's trading volume reached 15.02 billion yuan, with a turnover rate of 81.66%, reflecting active market participation [1]. Group 2: Liquidity and Monetary Policy - The central bank has injected over 1.4 trillion yuan in medium to long-term funds from January to March 2025, ensuring sufficient liquidity and stable money market rates, which has laid the groundwork for a rebound in the bond market [1]. - The market's expectations for continued monetary easing have been reinforced by these actions [1]. Group 3: Investment Opportunities - The 0-4 Year Local Government Bond ETF allows ordinary investors to participate in local bond investments more easily, as it has a lower entry threshold compared to traditional rate bonds [2]. - The T+0 trading mechanism enables investors to capitalize on daily price fluctuations, enhancing the efficiency of idle funds [2]. - Investors can also leverage the ETF for short-term financing through pledging, allowing for the purchase of additional financial assets [2].

Core Insights - The 0-4 local government bond ETF (159816) has seen a significant increase in trading activity, with a turnover of 147.8% and a transaction volume of 2.718 billion yuan, marking a historical high as of April 15, 2025 [1] - This ETF, established in July 2020, primarily invests in short-duration local government bonds and has demonstrated strong drawdown control, with maximum drawdowns of -0.22% and -0.28% for 2023 and 2024 respectively [1] - The fund has recorded annualized returns of 2.96% and 9.25% over the past year and three years, making it an attractive option for conservative investors [1] Investment Accessibility - Local government bond ETFs provide a more accessible way for ordinary investors to participate in local bond investments, as they have lower investment thresholds compared to traditional rate bonds [2] - The T+0 trading mechanism allows investors to capitalize on daily price fluctuations, enhancing the efficiency of idle funds [2] - Investors can also leverage their investments by pledging local bond ETFs to obtain additional funding for purchasing more ETFs or other financial assets [2] Market Conditions - Increased market risk aversion due to tariff impacts is favorable for the bond market, while expectations for potential interest rate cuts by the central bank are also rising [2] - As of April 14, the DR007 rate has decreased to 1.70%, indicating a loosening of the funding environment, which may reduce the likelihood of further tightening by the central bank [2] - The bond market's recent performance is influenced by overseas factors, with strong demand for safe-haven assets persisting amid global uncertainties [2]

申万宏源固收研究 . 申万宏源证券研究所债券研究部 【申万宏源固收】 黄伟平 杨雪芳 摘要 以下文章来源于申万宏源固收研究 ，作者黄伟平 杨雪芳 地方债二季度发行可能提速，但冲击或相对有限 Ø 一季度新增债发行节奏并不快，但置换债发行进度较快。 今年一季度新增债整体发行进度低于 2023年同期但高于2024年同期，置换隐债专项债2万 亿额度发行进度已超2/3。 Ø 二季度地方债发行或提速， 10Y及以上供给可能放量。 稳增长诉求和政策引导下，二季度新增专项债发行可能明显提速，置换隐债专项债或基本发 完，预计 4-6月各月发行相对平滑。期限方面，二季度主要关注10年及以上偏长期限地方债供给的放量。 Ø 地方债供给节奏是地方债 -国债利差的重要影响因素之一，但央行或通过买断式逆回购等方式配合，二季度地方债供给冲击或相对可控，且可能存在 阶段性交易机会。 银行仍为配置主力，近期广义基金配置意愿增强 Ø 近期广义基金等交易盘对地方债的配置意愿明显增强，伴随地方债流动性的明显提升。 2023年10月化债政策推进以来，广义基金等交易盘对地方债 的关注度和配置意愿明显提升，投资占比从2023年10月的5.44%提升至202 ...