Core Viewpoint - The adjustment of the value-added tax (VAT) policy on interest income from newly issued government bonds, local bonds, and financial bonds starting from August 8 will impact the yield spread between new and old bonds, with various institutions providing different estimates on the magnitude of this effect [1][3]. Group 1: Tax Policy Impact - The VAT on interest income for newly issued government bonds, local bonds, and financial bonds is set at 6% for ordinary self-operated institutions and 3% for asset management products, including public funds [1]. - Bonds issued before August 8 will continue to be exempt from VAT until maturity [1]. Group 2: Yield Spread Analysis - Huatai Securities estimates that the yield spread between new and old bonds will fluctuate between 5 to 10 basis points (BP) [3]. - Guosheng Securities estimates the yield spread range at 5.6 to 10.8 BP, while招商证券 calculates an average impact of approximately 12 BP on the comprehensive yield difference between new and old bonds [3]. - Short-term demand for old bonds is expected to increase due to their tax exemption, leading to a decline in their yields [3]. Group 3: Market Dynamics - Tianfeng Securities outlines a three-phase process for the repricing of new and old bond spreads, starting with increased demand for old bonds due to tax advantages, followed by a liquidity discount for old bonds as their liquidity decreases, and finally, a narrowing of spreads as tax-exempt bonds mature [3]. - The adjustment in the tax policy is likely to lead banks to alter their investment strategies, potentially increasing allocations to credit bonds and public funds due to the comparative tax advantages [5]. Group 4: Bank Impact - Banks, which hold about 30% of the total market bonds, are expected to benefit from the short-term gains on old bonds due to their tax-exempt status [4]. - However, the tax cost for new investments in government and financial bonds is projected to increase by approximately 23.2 billion yuan in the next year [4]. - The overall impact on bank profits from the VAT policy is estimated to be around -2.0% on the asset side and -0.5% on the liability side, indicating a limited overall effect [4].