Group 1: Policy Framework - Recent policy documents outline a clear path for local debt resolution and city investment transformation, emphasizing the importance of fiscal discipline and risk management[4] - The government aims to strictly prevent the addition of new hidden debts, establishing a robust accountability mechanism for violations[5] - The "14th Five-Year Plan" emphasizes the establishment of a comprehensive monitoring system for local debt to prevent and resolve hidden debt risks[5] Group 2: Debt Resolution Strategies - The focus of debt resolution is shifting towards operational debt, particularly targeting non-standard and "double non" debts, which are critical in triggering regional debt risks[7] - In 2026, the central government plans to issue 4.4 trillion yuan in special bonds to support major projects and replace hidden debts, with a budget deficit rate set at approximately 4%[9] - The government aims to resolve overdue payments to enterprises, enhancing the business environment and restoring market confidence[11] Group 3: Financing Platform Transformation - Over 82% of financing platforms have exited, indicating a significant shift towards market-oriented transformation, with policies reinforcing the separation of government financing functions[15] - The "14th Five-Year Plan" provides clear pathways for city investment transformation, focusing on urban renewal, infrastructure, and green industries[13] - Financing platforms are encouraged to transition from project builders to comprehensive urban operators, aligning with national strategies for sustainable development[15]

1. Report Industry Investment Rating No information about the industry investment rating is provided in the report. 2. Core Viewpoints of the Report - Since 2025, many new "quasi - urban investment" bond - issuing entities have emerged, whose main businesses are similar to or evolved from those of previous urban investment companies. They do not undertake government financing functions and bring certain investment increments to the credit bond market. The report will add a "quasi - urban investment" entity list based on the previous "Huachuang Fixed - Income 3802 Urban Investment Entity List" to help grasp market incremental investment opportunities [2][10]. - The central government has been promoting the urban investment companies to strip off government financing functions and transform towards the market since 2023. By the end of 2025, 70% of urban investment companies had exited, and many provinces will continue to promote the exit and transformation in 2026 [3][11]. - The new "quasi - urban investment" bond - issuing entities are mainly district - level entities in strong regions, with industrial investment entities accounting for nearly 70%. 85% of the funds are used to repay interest - bearing debts, and the substantial transformation work needs to be further promoted [4][19][24]. - The investment value of the new "quasi - urban investment" bond - issuing entities can be focused on two aspects: the investment value brought by the primary - secondary market spread and the varieties with excess spreads in the short - to - medium - term [5][8][32]. 3. Summary According to the Directory 3.1 Urban Investment Company Exit and Transformation - **Policy Background**: Since 2023, the central government has vigorously promoted the urban investment companies to strip off government financing functions and transform towards the market. Many important meetings and policy documents have emphasized the promotion of platform market - oriented exit and transformation and the prohibition of new or alienated financing platforms [3][11][12]. - **Achievements**: By the end of 2025, 70% of urban investment companies had exited. In 2025, Inner Mongolia, Liaoning, Gansu, and other regions had significant drops in the number of financing platforms. In 2026, many provinces will continue to promote the orderly exit and substantial transformation of financing platforms [3][11][13]. - **Transformation Directions**: The main transformation directions of urban investment companies include state - owned asset operation companies, urban comprehensive operators, and industrial investment - type state - owned enterprises [3][16]. 3.2 Characteristics of New "Quasi - Urban Investment" Bond - Issuing Entities in the Context of Urban Investment Transformation - **Market Overview**: Since 2025, a total of 400 new "quasi - urban investment" entities have been added, mainly district - level entities in strong regions. Shandong (Jinan), Zhejiang (Jiaxing, Ningbo, Huzhou), Guangdong (Guangzhou), and Jiangsu (Suzhou) have more new entities, with the number of entities in each region exceeding 40. In terms of administrative levels, district - level and prefecture - level entities still dominate [4][17]. - **Structural Analysis**: Due to the strict supervision of urban investment financing and the promotion of transformation policies, new industrial investment entities account for nearly 70%. Among the new entities, there are 32 state - owned asset operation entities, 266 industrial investment entities, and 102 urban comprehensive operation entities, accounting for 8%, 67%, and 26% respectively [4][19][28]. - **Use of Funds**: 85% of the funds of new "quasi - urban investment" bond - issuing entities are used to repay interest - bearing debts, and only 15% are used for project construction, operation, and equity investment fund replacement. The substantial transformation work needs to be further promoted [4][24]. 3.3 Investment Value of New "Quasi - Urban Investment" Bond - Issuing Entities - **Investment Value from Primary - Secondary Market Spread**: Since these bond - issuing entities are first - time bond issuers, the issuance prices of new bonds are mostly priced based on similar bonds in terms of market term, rating, and terms. As a result, the coupon rates of some bonds in the primary market are significantly higher than the trading rates in the secondary market. Based on the actual issuance situation, taking the balance of outstanding bonds of new "quasi - urban investment" entities as the statistics, the primary - secondary spreads of 0 - 5BP, 5 - 10BP, and over 10BP account for 32%, 9%, and 2% respectively, which are more concentrated in the short - to - medium - term, medium - and low - grade, and central and western regions [5][8][32]. - **Varieties with Excess Spreads in the Short - to - Medium - Term**: The bonds of these entities are mostly used to repay interest - bearing debts, and they are closely related to urban investment entities. Under the escort of debt - resolution policies, their safety is relatively high. Even if some entities are not related to urban investment and the funds are used for project construction, operation, and equity investment, their outstanding bond balances are relatively small and they are state - owned enterprises, so the debt - repayment pressure is relatively limited. Currently, the outstanding bonds with a remaining term of less than 3 years, an implicit rating of AA or above, and an excess spread of over 10BP are about 60 billion yuan. Bonds can be selected from district - level "quasi - urban investment" entities in Zhejiang and Guangdong and prefecture - level entities in Shandong, Anhui, Hebei, and Henan [5][8][32].

Core Insights - The 2025 annual index for Henan urban investment companies has been officially released, showing a stable development power index for these companies [1][5] - The index reflects the ongoing efforts in debt resolution and structural transformation within Henan province [5] Group 1: Development Power Index Rankings - The top three companies in the 2025 development power index are Henan Water Investment Group (78.31), Henan Transportation Investment Group (76.47), and Henan Railway Construction Investment Group (76.19) [3][2] - Zhengzhou Transportation Development Investment Group has made its first appearance in the top ten of the rankings [2][5] Group 2: Changes in Development Power - The average development power index for Henan urban investment companies in 2025 is 54.50, remaining stable compared to 2024 [5] - The provincial-level urban investment companies saw an increase of 0.92 points in their average index, while the city-level companies decreased by 2.08 points, and the county-level companies increased by 0.69 points [6] Group 3: Specific Company Developments - Henan Water Investment Group is recognized for its sustainable development capabilities, with significant projects like the Jia Ru River comprehensive management project (total investment of 7.244 billion) and the South-to-North Water Diversion project (total investment of 6.461 billion) [6][7] - Zhengzhou Industrial Investment Group has increased its registered capital from 1 billion to 30 billion RMB and plans to invest in various emerging industries [7] - Zhengzhou Aviation Port Science and Technology Group is actively involved in capital operations and has established funds for low-altitude economy and advanced computing [7] Group 4: Regional Performance - The development power index varies across different provincial cities, with cities like Anyang, Nanyang, and Jiaozuo showing improvements compared to the 2024 rankings [8] - Specific average development power indices for cities include Zhengzhou (58.09), Luoyang (48.23), and Nanyang (57.63), indicating mixed performance across the region [9]

Core Viewpoint - The training session held in Chenzhou aims to enhance the understanding and application of bond financing among local companies, aligning with provincial policies to support the real economy and improve direct financing channels [1][7]. Group 1: Training Objectives and Structure - The training focuses on addressing the pain points of direct financing development in Chenzhou, utilizing a "policy interpretation + case analysis + interactive exchange" model to empower participants [3][9]. - The session is part of the government's initiative to respond to provincial directives for high-quality development and aims to help local platform and listed companies grasp the latest bond market policies [3][9]. Group 2: Key Takeaways from the Meeting - Participants are encouraged to enhance their political awareness, responsibility, and urgency regarding financing, aiming to broaden channels and reduce costs through bond financing [4][10]. - The meeting emphasizes the need for market-oriented transformation of platform companies, improving governance structures, credit ratings, and project planning capabilities [4][10]. Group 3: Expert Contributions and Participant Feedback - Experts provided valuable insights on the transformation of urban investment enterprises, the latest bond market policies, and practical applications of various bond products [6][12]. - Participants expressed that the training was highly relevant and practical, enabling them to understand bond financing policies and operational processes, and effectively address challenges in their work [6][12].

Core Insights - The forum focused on the transformation direction of the bond market amid global economic slowdown and declining interest rates, emphasizing high-quality development in the bond market [2] - A key report titled "China Urban Investment Enterprises Comprehensive Development Index Research Report" was released, analyzing the current development status and future paths for urban investment enterprises during the "retreat platform" phase [2] Group 1: Forum Highlights - The event gathered over a hundred industry elites, including experts, financial institution executives, and corporate leaders, to discuss the bond market's future [2] - Keynote speeches were delivered by prominent figures, including the Executive Deputy Editor of Zhito Finance and the Chairman of Caitong Securities, setting the stage for in-depth discussions [2] Group 2: Urban Investment Enterprises - The discussion on "State-owned Enterprise Market-oriented Transformation and Regional Collaborative Development" highlighted the need for urban investment enterprises to balance debt reduction and development, addressing high debt levels and weak market competitiveness [4] - The transformation of urban investment enterprises has entered a new stage, moving beyond mere debt management to achieving substantial breakthroughs [4] Group 3: Innovative Financing Tools - The roundtable on "New Productive Forces Driving Industrial Layout and Financing Tool Innovation" featured insights on innovative financing tools such as sci-tech bonds, green bonds, and sustainable development-linked bonds [6] - The issuance scale of green bonds is projected to exceed 1 trillion yuan by 2025, with China leading globally in both issuance and outstanding amounts of green bonds, indicating significant future growth potential [6]

1. Report Industry Investment Rating No information about the report industry investment rating is provided in the content. 2. Core Viewpoints of the Report - Jining City has prominent resource endowments, continuously optimized industrial structure, and its economic development ranks in the upper - middle level in Shandong Province. However, there is an obvious differentiation in economic development among districts and counties. The fiscal self - sufficiency ability is average, with a high degree of dependence on land finance, and the debt risk of urban investment enterprises is worthy of attention. [7][8][11][14] - Since 2024, Jining has taken multiple measures to promote debt resolution, improved the government debt management mechanism, and achieved phased results in debt resolution, such as slowing down the growth rate of urban investment debt, optimizing the debt structure, and reducing the financing cost. [7][27][31] - The issuance of urban investment bonds in Jining tends to have a longer term, and the interest rates and spreads in the primary and secondary markets have decreased. However, the urban investment bond financing was a net outflow in 2024, and the pressure of existing bond repayment is relatively concentrated. [7][34][35] - The commercial paper overdue events in Jining were concentrated from 2022 to 2024 and have converged since 2025. The scale of urban investment lease financing has been continuously decreasing since 2023, and the existing lease financing is still concentrated in economically strong districts. [7][37][40] - The bonds of Jining's industrial investment companies are closely related to national strategies, with short approval time and fast issuance rhythm. However, all are private placements, most bond items are guaranteed, and the issuance costs of some district - level industrial investment companies are relatively high. [7][44][45] - There are many industrial investment enterprises in Jining's urban investment transformation, mainly at the district - county level, with diversified businesses and AA - AA+ as the main credit ratings. [7][49][54] 3. Summary According to Relevant Catalogs Regional Overview - **Geographical and Population Information**: Jining is a central city in the Huaihai Economic Zone, covering an area of 11,187 square kilometers, with a permanent population of 8.1873 million by the end of 2024. However, the population has shown a net outflow trend. [8] - **Resource and Industry**: It has four major resource advantages: minerals, water transportation, agriculture, and culture. The industrial pattern is "coal - power - chemical industry as the foundation, manufacturing as the support, and the service industry accelerating development". It is transforming from "resource - dependent" to "innovation - driven". [9] - **Economic Development**: In 2024, Jining's GDP ranked sixth in Shandong Province, with a growth rate slightly higher than the provincial average. The district - county economic development is uneven, showing a pattern of "strong core areas and weak peripheral areas". [11][13][14] - **Fiscal Situation**: The general public budget revenue in 2024 was 4.9626 billion yuan, ranking fifth in Shandong. The fiscal balance rate was 62.02%, and the comprehensive financial resources were 12.8422 billion yuan, with a high degree of dependence on government fund income. The fiscal development among districts and counties is unbalanced. [16][17][19] - **Debt Risk**: The legal debt risk of the Jining government is relatively controllable, but the interest - bearing debt of urban investment enterprises is prominent. The debt ratio after the superposition of the two exceeds 300%, and the debt is highly concentrated in economically strong districts. [21][22] Debt Resolution Progress - **Measures**: Jining promotes debt resolution through five measures: using bond tools precisely, implementing fiscal revenue expansion and expenditure reduction, promoting urban investment transformation, deepening government - finance - enterprise cooperation, and strengthening supervision. [27][28][29] - **Results**: Since 2024, the growth rate of urban investment debt has slowed down, the debt structure has been optimized, and the financing cost has decreased. However, the financing cost is still high, and the short - term debt repayment pressure remains. The issuance of urban investment bonds has become more long - term, and the interest rates and spreads in the primary and secondary markets have decreased. But the urban investment bond financing was a net outflow in 2024, with concentrated existing bond repayment pressure. The commercial paper overdue events have converged since 2025, and the scale of urban investment lease financing has been continuously decreasing. [7][31][34] Urban Investment Transformation - **Bond Issuance of Industrial Investment Companies**: As of November 2025, 8 bonds of industrial investment companies in Jining have been issued for the first time, with a total issuance scale of 3.22 billion yuan. The bond labels are closely related to national strategies, with short approval time and fast issuance rhythm. But all are private placements, most bond items are guaranteed, and some district - level companies have relatively high issuance costs. [44][45][48] - **Industrial Investment Enterprises in Transformation**: There are 8 industrial investment enterprises in Jining's urban investment transformation, mainly at the district - county level. The transformation models include setting up new platforms, newly established platforms, and new platforms under urban investment companies. The business is diversified, and the main credit ratings are AA - AA+. [49][53][54]

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the credit bond market, focusing on the outlook for 2026 and the performance of various sectors within the industry, including local government financing platforms (城投) and non-bank financial institutions. Core Insights and Arguments 1. **2025 Credit Bond Market Performance**: The credit bond market in 2025 is expected to be stable, with coupon yields providing solid returns, particularly during the March allocation window. However, long-term credit bonds face challenges as the credit spread for long-term bonds is expected to widen, making trading more difficult [3][5]. 2. **Investment Opportunities in 2026**: The focus for 2026 will be on the value of coupon yields in a volatile market, with attention on the transformation of local government financing platforms, risks in financial and industrial bonds, and opportunities arising from the expansion of southbound investment channels [6][11]. 3. **Risks in a Low-Interest Environment**: There is a need to be cautious of tail risks in the current low-interest environment, emphasizing the importance of fundamental research to understand valuation fluctuations and liquidity loss [7][49]. 4. **Transformation of Local Government Financing Platforms**: The transformation of local government financing platforms is accelerating, which will significantly impact local government construction. The focus will be on policy guidance to ensure the successful resolution of hidden debt issues [8][9][12]. 5. **Regional Disparities**: Investment demand is increasing in coastal regions and first-tier cities, while some southwestern and northern regions face significant debt pressure and limited financing support [2][14]. 6. **Institutional Behavior Impact**: The expansion of wealth management scale has increased demand for short-term credit bonds, while the decline in fund sizes has reduced allocations for medium to long-term bonds. This shift in institutional behavior significantly affects pricing and demand structures [10][11]. 7. **Future of Local Government Financing**: Local government financing platforms are expected to gradually de-platform, no longer assuming debt responsibilities, yet they will remain crucial for local government operations in the next 5-10 years [12][13]. 8. **Policy Adjustments**: Recent policy adjustments have aimed to alleviate fiscal pressures, including the resumption of issuing special bonds and flexible adjustments in their usage [16]. 9. **Credit Risk in Non-Bank Financial Institutions**: Non-bank financial institutions face various risks, including market, liquidity, credit, and refinancing risks. The central bank's new liquidity support mechanism aims to prevent individual liquidity issues from escalating into systemic risks [4][27][29]. 10. **Investment Strategy for 2026**: The investment strategy should focus on identifying coupon yield opportunities, recognizing credit risks based on fundamentals, and observing structural changes and opportunities from the product and institutional behavior perspectives [11][60]. Other Important but Potentially Overlooked Content - The credit bond market is expected to face a significant gap in high-yield assets in 2026, with a large volume of high-yield deposits maturing, which could push credit spreads and yields higher [47][48]. - The performance of the real estate sector remains uncertain, with ongoing liquidity and credit risk issues, particularly highlighted by the Vanke incident, which has affected overall market sentiment [40][43]. - The future of the credit bond market will likely see a rise in credit risk premiums due to potential unexpected risk events, necessitating careful monitoring and strategic adjustments [52][68]. This summary encapsulates the key points discussed in the conference call, providing insights into the credit bond market's current state and future outlook, as well as the implications for investment strategies.

Group 1: Report Industry Investment Rating - Not mentioned in the content Group 2: Core Viewpoints of the Report - As the critical debt - resolution point in June 2027 approaches, the market refocuses on the credit risk of urban investment bonds. The report analyzes the current debt - resolution progress, new trends, and provides an outlook for the post - June 2027 situation, as well as investment strategies [1][9] Group 3: Summary According to the Table of Contents Current Debt - Resolution Progress: Reviewing Results from Data - **Significant achievements but high overall debt**: In 2025, debt risk has been continuously mitigated, with notable results in debt cost reduction, structure optimization, and platform list exits. However, the total debt scale remains high, and the debt ratio of most provinces is rising. As of June 30, 2025, the total "local full - scale debt" exceeded 120 trillion yuan, a year - on - year increase of 11% [10][17][19] - **Diversified debt - resolution tools but crowding - out effect on investment**: By December 17, 2025, 2 trillion yuan of "special bonds for replacing implicit debts" have been issued. There are also special new - added special bonds and special refinancing bonds in the issuance process. But debt resolution has crowded out project investment. As of December 5, 2025, the proportion of new - added special bonds for project investment dropped to 58% from 78% in 2024 [24][26] New Trends in the Second Half of Debt Resolution - **Focus on operating debt**: The central government emphasizes "optimizing debt restructuring and replacement methods" for operating debt of urban investment platforms. This may involve continued non - standard debt replacement, possible implicit debt trusteeship (not widely adopted), debt - up - shifting and unified borrowing and repayment, and individual case debt restructuring in extreme situations [34] - **Transformation of urban investment and changes in bond market supply structure**: In the short and medium term, traditional urban investment financing is restricted, while transportation and industrial investment platforms in quasi - urban investment platforms still have financing. The local development impetus is accelerating the transformation from traditional infrastructure to new infrastructure, science and technology innovation, and industrial investment [39] - **Establishment of a long - term debt - resolution mechanism**: The establishment of the Debt Management Department of the Ministry of Finance reflects the trend of upgrading government debt management. At the local level, the revitalization of state - owned assets has become a key task, but there are also potential risks and challenges [48][49] Outlook for the Second Half: What Investors Are Concerned About - **View on weak - region urban investment bonds after June 2027**: The systemic default risk is low, but structural differentiation is a consensus, with valuation fluctuation risk and liquidity risk being more prominent. Regional and platform - level differentiation may occur, and the government's support willingness for different types of platforms varies [56][57][58] - **Risk observation**: Future risk observation of urban investment bonds may shift from traditional indicators to more forward - looking and multi - dimensional sentiment monitoring, including bill overdue, non - standard sentiment, overseas bond issuance, and loan sentiment, as well as the transformation effectiveness of regional transformation entities [61] Investment Strategy - **For short - to medium - duration bonds**: For entities mainly relying on traditional urban investment business, the safety margin of short - to medium - duration bonds is relatively strong, but the cost - effectiveness is limited. Attention should be paid to valuation fluctuation risks. Some regions can sink to lower - rated bonds within 2 years [71] - **For long - duration bonds**: Focus on medium - to high - grade, highly liquid, and large - scale bonds, or some entities with good transformation results and stable cash - flow business. Avoid excessive sinking. The cost - effectiveness of extending the duration in sentiment - affected regions is relatively low [71] - **For weak entities**: Be more cautious about entities with weak regional endowments, unclear transformation directions, and uncertain new business prospects. Pay attention to bond issuance opportunities of some urban investment platforms in line with the development of high - tech and strategic emerging industries under the background of science - innovation bonds [73]

1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints of the Report - The 2025 Central Politburo Meeting and Central Economic Work Conference emphasized the continuation of loose fiscal and monetary policies and the resolution of key issues such as local government debt and arrears to enterprises [2][8][9] - In November 2025, the issuance of local government bonds for debt resolution accelerated, with the 500 - billion - yuan local debt balance quota concentratedly implemented. The progress of implicit debt clearance, platform withdrawal, and exit from key provinces continued [3][13] - The net financing of urban investment bonds remained under pressure, and the resolution of operating debts, including non - standard debts, continued. The integration and transformation of urban investment platforms were active, and the number of new issuers of industrial bonds increased [4][6] 3. Summary According to Relevant Catalogs 3.1. Major Policy Updates on Debt Resolution and Urban Investment Transformation - The 2025 Central Politburo Meeting emphasized the continuation of loose fiscal and monetary policies and the resolution of arrears to enterprises [2][8] - The 2025 Central Economic Work Conference focused on resolving local government debt risks, especially the "operating debt risks of financing platforms", and optimizing debt restructuring and replacement methods [2][9][10] 3.2. Debt Resolution Progress Tracking 3.2.1. Implicit Debt Resolution Progress - **Local Government Bond Replacement**: In November, the issuance of local government bonds for debt resolution accelerated. The annual quota of special bonds for replacing implicit debts was almost completed, with only 1.1 billion yuan remaining in Henan. Special refinancing bonds resumed issuance, and the 500 - billion - yuan local debt balance quota was concentratedly implemented. The total annual issuance of local government bonds for debt resolution reached 3.58 trillion yuan by November 30, 2025 [3][13][14] - **Implicit Debt Clearance**: As of the end of November 2025, Guangdong, Beijing, and Shanghai, 30 prefecture - level cities, and 146 districts and counties had announced the completion of implicit debt clearance [3][24] - **Platform Withdrawal and Exit from Key Provinces**: Nationally, as of the end of September 2025, the number of financing platforms decreased by 71% compared to March 2023. In November 2025, 31 entities announced "no longer undertaking government financing functions", and 32 entities declared themselves market - oriented operating entities. Inner Mongolia confirmed its exit from key provinces, and Ningxia met the exit conditions [3][30][31] 3.2.2. Operating Debt Resolution - **Bonds**: In November, the net financing of urban investment bonds remained under pressure, with the proportion of debt for borrowing new to repay old reaching 93%, and the average issuance interest rate slightly dropping to 2.34% [4] - **Non - standard Debt Resolution**: In November, 3 cases of non - standard debt resolution were monitored, all through bank loan replacement. The actual progress of bank loan replacement of non - standard debts was relatively slow [4][48][49] - **Unified Borrowing and Repayment**: In November, only 1 "unified borrowing and repayment" bond was issued, with a limited number of overall implementation cases [54] 3.2.3. Arrears to Enterprises - In November, many places continued to promote the resolution of arrears to enterprises and announced relevant progress [5][59] 3.3. Tracking of Urban Investment Platform Integration and Transformation 3.3.1. Overview of Urban Investment Platform Integration - In November, 39 urban investment platform integration events were monitored, with Jiangsu being the most active region. The integration mainly included three directions: establishing new industrial investment platforms through asset integration, promoting professional integration of business segments, and integrating regional resources to create high - credit - rating entities [6][61] 3.3.2. Overview of New Issuers of Industrial Bonds - In November, the number of new issuers of industrial bonds increased significantly, with 80 new issuers, of which 49 were urban - investment - like industrial entities, accounting for 61%. The industries were concentrated in social services, non - bank finance, and real estate [6][76][78]

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - In 2025, the urban investment bond market entered a low - volatility and long - short differentiation era with record - low net financing and issuance rates, and the shortest historical volatility and widening term spreads [1][47] - As 2027 June approaches, 2026 may be the starting point for urban investment bonds to return to differentiation. Although short - term risks are controllable, long - term transformation is inevitable [2][3] - In 2026, short - duration sinking strategies are still applicable, while long - duration band trading is difficult to grasp [4][5] 3. Summary by Relevant Catalogs 3.1 2025, Low - Volatility and Long - Short Differentiation in the Stock Era 3.1.1 Net Financing and Issuance Rates Hit Record Lows - In 2025, new debt - resolution policies decreased, focusing on exiting key provinces and platforms, and "resolving existing debts and curbing new ones." The bond - issuance policy tightened, and the net financing of urban investment bonds reached a record low. From January to November, it was only 4 billion yuan, and there was a possibility of turning negative [11][17] - Low - level and medium - low - grade entities had large net repayment volumes. AA and below low - grade bonds and AA+ bonds had negative net financing, and district - county and park - level bonds also had negative net financing [21] - Most provinces saw a decline in net financing. Jiangsu had a net repayment of over 100 billion yuan, while Guangdong had a net financing of 8.77 billion yuan [22][23] - The issuance rate of urban investment bonds fluctuated downward, reaching a historical low in July. Except for Guizhou, the average issuance rate of other provinces was between 2% - 2.8%, and most provinces' rates decreased compared to the beginning of the year [27][31] 3.1.2 The Smallest Volatility in History and Widening Term Spreads - In the secondary market, the yield of urban investment bonds fluctuated in an "M" shape, and the credit spread narrowed. Taking the 3 - year AA+ implicit - rating urban investment bond as an example, the yield increased slightly by 14bp, and the credit spread narrowed from 47bp to 25bp [34] - 2025 was the year with the lowest static yield and the narrowest volatility for urban investment bonds. The mid - value of the 3 - year AA+ implicit - rating bond yield decreased by about 40bp, and the volatility range was only 29bp [37] - The short - and medium - term volatility narrowed significantly. The volatility range of the 3 - year AA variety narrowed from 72bp to 23bp [41] - The term spread of urban investment bonds widened. By the end of February, the term spreads were at historical lows, but then widened from February to October [42] 3.2 Approaching June 2027, 2026 May Be the Starting Point for Urban Investment to Return to Differentiation - In 2026, most urban investment bond investments will have maturities after June 2027. The scale of bonds maturing or exercisable after June 2027 has exceeded half of the total, and by the end of 2026, over 80% of bonds are expected to mature after June 2027 [48] - The speed of urban investment platforms exiting the list has accelerated since the second half of 2025, and the number of issuers declaring themselves as market - oriented business entities has increased significantly [49] - Whether the market's preference for urban investment bonds will change depends on local governments' willingness and ability to repay debts. Currently, the connection between urban investment and local governments remains close, and the tail - end regional risks have been mitigated to some extent. The market has not over - priced the issuers exiting the list [2][54][59] - In the long run, as traditional public - welfare businesses saturate, urban investment transformation is inevitable. The pricing of credit spreads may become more market - oriented, and 2026 may be the starting point for the return of differentiation, which is a long - term and gradual process [3][64][70] 3.3 In 2026, Short - Duration Sinking Is Still Applicable, and Band Trading May Be Difficult to Grasp - Urban investment bonds were the best - performing assets in the bond market in 2025. Short - duration sinking can still provide good returns with significantly reduced volatility. For example, the 90 - day moving average annualized return of 1 - year AA - implicit - rating urban investment bonds was 2.6%, and the volatility decreased to 0.67% [4][75][78] - It is recommended to focus on 1 - 3 - year AA(2) and 2 - 3 - year AA urban investment bonds, which have an average yield of over 2%, a large balance of outstanding bonds (3.1 trillion yuan in total), and good liquidity. The monthly transaction volume accounts for 4% - 10% [81] - Band trading of long - duration urban investment bonds in 2026 may be difficult to grasp. The participation in long - duration bonds may be similar to 2025, with less incremental funds. If the trend of interest - rate bonds is not obvious, band trading will be challenging. Long - duration bonds have weak liquidity, and it is recommended to choose AAA - rated entities in developed provinces [5][88]