1. Report Industry Investment Rating There is no information provided in the content about the report industry investment rating, so this part is skipped. 2. Core Viewpoints of the Report - Since the new round of local government debt resolution started in July 2023, "fiscal debt resolution" and "financial debt resolution" have been used to achieve "halt increase and resolve stock". After two years of implementing the package debt - resolution policy, the Central Economic Work Conference in December 2025 first mentioned the resolution of local operating debts. [1][5] - Although the debt resolution of urban investment platforms has received strong policy support, at the micro - level, some regions in economically strong provinces still have to raise high - interest funds through overseas bonds and non - standard channels to maintain the capital chain, and the pressure to resolve operating debts in some regions still exists. It is expected that in 2026, based on the "Document No. 35", the debt - resolution effectiveness will be further consolidated. [4] 3. Summary According to Relevant Catalogs 3.1 Fiscal and Financial Debt Resolution across the Country - The third round of debt resolution started in July 2023. "Fiscal debt resolution" mainly uses local government bonds to replace implicit debts, and the funds come from the "6 + 4+2" debt - resolution funds. In financial debt resolution, banks have become the main channel of low - interest funds. [5] - Key provinces have seen a contraction in debt due to fiscal debt - resolution funds. Among non - key provinces, 15 out of 19 still have an increase in urban investment interest - bearing debts. In terms of debt structure, 22 provinces achieved a reduction in non - standard debt scale in 2024, and the bank loan scale of 7 provinces shrank. [6] 3.2 Debt Resolution in Jiangsu, Zhejiang, and Shandong 3.2.1 Special Bond Replacement - Jiangsu, Zhejiang, and Shandong have large debt scales and have obtained a relatively large amount of replacement bonds, but the coverage of the issued replacement bonds for local urban investment interest - bearing debts at the end of 2023 is low. The large - scale operating debts still need to be resolved through market - based methods. [15][16] 3.2.2 Bank Borrowing and Domestic Bond Financing - The growth rate of urban investment interest - bearing debts in the three provinces has declined, and the comprehensive financing cost has decreased. The financing structure has tilted towards bank loans. Jiangsu and Zhejiang attract more participation from state - owned large - scale banks and joint - stock banks, while Shandong relies more on policy - based banks. [18] - The issuance interest rate of urban investment bonds has declined, and the domestic bond financing cost of the three provinces has decreased. However, under the background of supply contraction, the new replacement space is limited. Jiangsu and Zhejiang have a net repayment of urban investment bonds, while Shandong's net financing scale of urban investment bonds decreased significantly in 2025. [24] 3.2.3 Non - standard and Overseas Bond Financing - In non - standard financing, Jiangsu's non - standard scale shows a "south increase and north decrease" pattern. Shandong has achieved significant results in clearing non - standard debts, but there are still high - interest non - standard products and default events in some areas. Zhejiang's non - standard debt has increased significantly, with high - quality areas and areas with high debt pressure having different situations. [30][31][33] - In overseas bond financing, Shandong has the highest net financing scale of overseas bonds in the country, with a prominent problem of high financing costs. Zhejiang's overseas bond financing turned to net repayment in 2025, and most cities' issuance costs are below 6%. Jiangsu's overseas bond financing is mainly concentrated in northern Jiangsu, with relatively low costs. [42][44] 3.3 Summary and Consideration - Jiangsu and Zhejiang are more favored by state - owned large - scale banks and joint - stock banks, and the proportion of bank funds in the financing structure has increased significantly. They also use non - standard and overseas bond financing channels. Shandong faces more prominent debt - resolution challenges, relying more on policy - based banks, and having problems such as high - cost overseas bond financing and local non - standard debt default. [54][55][56]

Core Insights - The 2025 Bond Market High-Quality Development Conference will be held in Zhengzhou from December 17 to 19, focusing on policy interpretation, business exchanges, resource connections, and field investigations, attracting representatives from regulatory bodies, financial sectors, enterprises, and academic institutions to explore innovative paths and new opportunities in the bond market [1] Macro Dynamics - The People's Bank of China conducted a 1,353 billion yuan 7-day reverse repurchase operation on December 16, with a net injection of 180 billion yuan, as 1,173 billion yuan of reverse repos matured on the same day [3] - As of the end of November, the total RMB loan balance in Henan Province was 92,452.3 billion yuan, with household loans at 35,284 billion yuan and corporate loans at 57,005.2 billion yuan [3] Local Debt Issuance Plans - The first local government bond issuance plan for Q1 2026 was announced by Sichuan Province, intending to issue 1,887 billion yuan in bonds, including 1,000 billion yuan in new bonds and 887 billion yuan in refinancing bonds [5] - Luoyang City emphasized the need to identify and mitigate risks in real estate, local government debt, and state-owned enterprise debt to prevent systemic risks [5] Special Bonds and Financing - Recent issuance of special bonds targeting government investment funds has reached nearly 850 billion yuan, with multiple regions participating in this trend [6] - Zhengzhou Economic Development Capital Group plans to issue 11 billion yuan in technology innovation bonds, which have been accepted by the Shanghai Stock Exchange [8] - Henan Muxing Industrial Investment Co., Ltd. is set to issue 10 billion yuan in low-carbon transition-linked corporate bonds, marking its first bond issuance [9] Credit Ratings and Regulatory Actions - The Zhengzhou Municipal Development Investment Co. has received approval for a 10 billion yuan medium-term note registration [10] - The Henan Aviation Port Investment Group plans to issue 10 billion yuan in medium-term notes to repay existing debt [11] - The Luoyang Transportation Investment Group has been rated AA+ for its creditworthiness, indicating a stable outlook [18] Market Perspectives - Zhongzheng Pengyuan indicates that future debt resolution may increasingly rely on financial and market-based restructuring methods, emphasizing a "zero tolerance" approach to new hidden debts [22] - Huayuan Fixed Income reports that the cost-effectiveness of medium to long-term urban investment bonds has improved, suggesting a strategy of selecting high-quality urban investment entities for better yield [23]