Core Viewpoint - The issuance of financial bonds has shifted from being an option to a necessity for both banks and non-bank institutions, driven by significant growth in issuance volumes and changing market conditions [1][2]. Group 1: Financial Bond Issuance Trends - As of July 1, 2023, the issuance of financial bonds by banking institutions, excluding interbank certificates of deposit and asset-backed securities, exceeded 9.11 trillion yuan, marking a year-on-year increase of 110% [1]. - Non-bank institutions, particularly insurance and trust companies, saw bond issuance growth rates of 134% and 71%, respectively [1]. Group 2: External and Internal Factors - The low interest rate environment has created favorable conditions for financial institutions to issue bonds, with the 10-year government bond yield remaining below 1.7% in 2024, allowing for financing costs under 2% [2]. - The cost of issuing bonds has significantly decreased, exemplified by a state-owned bank's issuance of a 10-year subordinated debt at a coupon rate of 1.93%, down 69 basis points from the previous year [2]. - The current 3-year AAA-rated financial bond yields are 30 basis points lower than comparable time deposits, indicating a shift towards lower-cost financing options [2]. Group 3: Capital Needs and Regulatory Support - Financial institutions are compelled to issue bonds to strengthen their capital base in response to narrowing interest margins and increasing regulatory pressures [3]. - The regulatory environment has evolved to facilitate bond issuance, transitioning from "single approval" to "annual filing," and encouraging banks to support small and micro enterprises through bond financing [3]. Group 4: Market Dynamics and Future Outlook - The surge in bond issuance may lead to increased market supply pressure, potentially raising interest rates and destabilizing the bond market, prompting the central bank to adopt a macro-prudential approach to assess market conditions [3]. - The industry is urged to adopt a consensus on "rational bond issuance," balancing financing needs with market capacity, while regulators should enhance forward-looking guidance to prevent systemic risks [3]. - The future of financial bonds as a stabilizing force for the industry and support for the real economy hinges on orderly expansion while maintaining risk management [3][4].