Group 1: Report Highlights - The widening spread between special-purpose bonds and general bonds was mainly driven by supply shocks and the differentiated risk weights of commercial banks. The relative relationship of spreads between 20Y and 30Y local government bonds was driven by changes in Treasury yields. There were regional differentiations in the primary spread levels of local government bonds, and the difference between primary and secondary spreads verified the differences in the marketization degree of issuance in each region. The liquidity level of local government bonds affected the historical spread changes. There were certain differences in the number of market quotes from brokers in each region, reflecting the differences in liquidity. Moreover, there were regular differentiations in the trading preferences of each province and various institutional entities [3]. Group 2: Core Views - The report systematically analyzed the investment value of local government bonds from two core dimensions: the changes in local government bond spreads and their influencing factors, and the trading and buying situations in the local government bond market. It provided in - depth analyses of the driving factors behind the widening of the spread between special - purpose bonds and general bonds from late 2024 to early 2025 and the change in the relative relationship between 20Y and 30Y local government bonds around Q4 2024. It also focused on the regional differentiations in primary and secondary spreads and their causes, and summarized the regular characteristics in trading and net - buying preferences in the market [78]. Group 3: Summary by Directory 1. Exploration of Factors Affecting Local Government Bond Spreads 1.1 Widening of Spread between Special - Purpose Bonds and General Bonds - From 2020 to early 2024, the spread between special - purpose bonds and general bonds remained stable within the range of - 4 to 4bp. However, from late 2024 to early 2025, the spread widened significantly, reaching a peak of 8bp in early May 2025 and then gradually falling back to around 2bp. The main reasons were the concentrated supply shock of special - purpose bonds and the differentiated risk weights of commercial banks. In November and December 2024, over 2 trillion yuan of special - purpose bonds were issued, which exceeded the market demand and broke the supply - demand balance. The "Commercial Bank Capital Management Measures" implemented on January 1, 2024, differentiated the risk exposure weights of general bonds (10%) and special - purpose bonds (20%), which increased the capital occupation cost of commercial banks for special - purpose bonds and reduced their allocation demand [14][18]. 1.2 Changes in Spreads of 20Y and 30Y Local Government Bonds - The spread between 20Y and 30Y local government bonds changed around Q4 2024, with the spread of 30Y local government bonds minus that of 20Y local government bonds turning from negative to positive. This change was mainly due to the change in the relative level of 20Y and 30Y Treasury yields, as the change point of Treasury yields coincided with that of local government bond spreads [32]. 1.3 Difference between Primary and Secondary Spreads - From 2015 - 2025, the primary spreads of local government bonds showed significant regional differentiations and term - related characteristics. Regionally, the primary spreads were inversely related to the regional economic development level, with higher spreads in the central, western, and northeastern regions. In terms of term, the primary spread of 1Y local government bonds was relatively low, while those of 2 - 10Y bonds were generally over 20bp, and the spread of 5Y bonds was the highest at 23.21bp. The spreads of 15 - 30Y long - term local government bonds fluctuated around 18bp. The difference between primary and secondary spreads reflected the regional differentiations in the marketization degree of local government bond issuance. Some provinces had a small difference between primary and secondary spreads, while in some areas such as Ningbo, Shanghai, and Shenzhen, the non - marketization of issuance was more serious [35][40]. 1.4 Factors Affecting Spreads - The offensive and defensive characteristics of local government bonds changed significantly around August 2023. Before August 2023, local government bonds had stronger defensive attributes than Treasury bonds, and their spread changes were mainly passive. After August 2023, their offensive attributes became prominent, and the active widening and narrowing of spreads were obvious. The main reasons were the change in the participation of trading desks and the impact of policies on the supply term structure of local government bonds. The increase in the supply of special - purpose bonds also led to the widening of spreads in some stages [45][49][52]. 2. Analysis of Local Government Bond Trading and Buying 2.1 Bid/Ofr Quote Quantity and Spread - According to the sampling data of 10Y new local government bonds issued after August 8, 2025, in the broker market, there were significant differences in the liquidity of local government bonds in each region. Some regions had high broker - market activity, with sufficient bid and ofr quotes and active trading, while some regions had poor liquidity. The average bid - ofr difference of the sampled provinces was about 1.68bp, and the ChinaBond valuation price was generally 1 - 2bp higher than the ofr price [58]. 2.2 Regional Trading Patterns - By comparing the trading volume and trading value of local government bonds in 2024 and 2025, it was found that some regions had obvious trading preferences for certain - term local government bonds. For example, 1 - 3Y bonds were more actively traded in Zhejiang, 5 - 7Y bonds were more popular in Shenzhen, Chongqing, and Jiangsu, and long - term bonds with a term of over 20Y were actively traded in Fujian, Shandong, and Sichuan. The weighted average trading terms calculated by trading volume and trading value were consistent with the above - mentioned trading preferences [63]. 2.3 Net Buying - Based on the data from 2021 - 2025, different institutional entities had different net - buying preferences for local government bonds of different terms. Large - scale banks mainly focused on local government bonds with a term of less than seven years, rural commercial banks had a more diverse range of term preferences, city commercial banks' net - buying characteristics were similar to those of rural commercial banks, securities firms' self - operation mainly concentrated on 1 - 5Y local government bonds, funds' net - buying terms were more dispersed, and insurance companies showed an increasing preference for long - term local government bonds and were the largest net - buying entities for 15 - 30Y local government bonds [68]. 2.4 Cross - Market Trading Comparison - After the optimization of the local government bond transfer - custody business, it became more convenient to transfer local government bonds between the inter - bank market and the exchange market. The inter - bank market had the largest trading volume of local government bonds, and the absolute values of the differences between the trading prices in the inter - bank and broker markets and the ChinaBond valuation were smaller. The Shanghai Stock Exchange had a larger trading volume than the Shenzhen Stock Exchange, with higher trading yields [73][76].