Core Viewpoint - The recent expansion of local special bonds to support existing PPP projects is expected to inject new confidence into the infrastructure sector, addressing financing constraints and improving public service quality and efficiency [4][6]. Group 1: Local Special Bonds and PPP Projects - The Ministry of Finance has clarified that local special bonds can now support existing PPP projects, allowing for a more flexible and diversified use of funds [1][4]. - The new regulations encourage financial institutions to collaborate with social capital partners, optimizing financing structures to ensure the stability of credit and asset quality for PPP projects [3][4]. - As of October 2022, there are 10,332 projects in the PPP project library with a total investment of 16.6 trillion yuan, with approximately 80% of this amount being debt-related [7]. Group 2: Challenges and Regulatory Measures - Issues such as illegal borrowing, misallocation of funds, and idle projects have been reported, highlighting the need for enhanced regulatory oversight to ensure compliance and effective use of funds [2]. - The recent guidelines aim to address challenges in project advancement and financing constraints, emphasizing the importance of budget management and prioritization of operational subsidies for existing projects [4][6]. Group 3: Impact on Financial Institutions - The new guidelines are seen as a significant benefit for banks involved in PPP projects, as they are expected to stabilize credit issuance and improve the repayment capabilities of local governments [6][7]. - Financial institutions are required to establish a credit service system that aligns with the characteristics of PPP projects, ensuring timely loan disbursement and adherence to contractual obligations [4][6]. Group 4: Broader Applications of Special Bonds - The innovative uses of local special bonds are expanding, with funds being allocated for land reserve projects and addressing overdue payments to enterprises, thereby enhancing liquidity in the market [8][9]. - The combination of special bonds and PPP models is anticipated to provide additional resources for local governments, aiding in the resolution of existing debt risks and improving the operational efficiency of local banks [6][9].

Group 1 - The company, Chongqing Yongchuan High-tech Industry Investment Development Group Co., Ltd., received an "AA+" rating for its 2024 first phase medium-term notes [1] - The company remains a key player in infrastructure construction in Yongchuan District, primarily responsible for land remediation and infrastructure development in Yongchuan High-tech Industrial Park [2] - The company's revenue in 2024 is expected to mainly come from land remediation and infrastructure construction, with strong continuity in land remediation business [2] Group 2 - The economic and fiscal strength of Yongchuan District is positioned in the upper-middle level within Chongqing, with an increase in general public budget revenue in 2024 [2] - The company faces uncertainties in revenue realization due to factors such as regional economic environment, investment attraction policies, and land transfer progress [2] - The company has a growing debt scale, with a high proportion of bond financing and non-standard financing, leading to a heavy debt burden and short-term repayment pressure [2]

Core Viewpoint - Guosen Securities is enhancing cross-border green financial services to support high-quality local economic development through innovative financial solutions and green bond issuances [2][4][6]. Group 1: Green Bond Issuances - In the first half of 2025, Guosen Securities, through its subsidiary Guosen Hong Kong, successfully facilitated multiple overseas green bond issuances, including a €140 million green bond for Taizhou Huangyan Transportation Tourism Investment Group [1][4]. - The company assisted Chengdu Xingjin Investment Group in issuing RMB 1.7 billion dim sum bonds, setting a record for offshore RMB bonds in Central and Western China [1][6]. - Guosen Hong Kong also supported Fujian Jinshang Holdings in issuing $180 million sustainable development bonds, promoting regional infrastructure projects [1][8]. Group 2: Support for Sustainable Development - The green bond issued for Taizhou Huangyan focuses on low-carbon transformation in transportation and tourism, aligning with the company's sustainable development strategy [4]. - Chengdu Xingjin's dim sum bonds are aimed at financing projects that generate positive environmental and social impacts, including green buildings and affordable housing [6]. - The issuance by Fujian Jinshang Holdings marks its first appearance in the overseas market with sustainable development bonds, providing funding for infrastructure and public utility projects [8][9]. Group 3: Commitment to Green Finance - Guosen Securities is committed to responding to national calls for green finance development, aiming to create a diversified green financial service system [2][9]. - The company plans to continue enhancing its cross-border business service quality, leveraging its expertise in green finance to support local state-owned enterprises in meeting their funding needs [9]. - Future efforts will focus on guiding social capital towards key areas of green and low-carbon economic development, aligning with the "dual carbon" goals [9].

Investment Rating - The report indicates a positive outlook for the issuance of Sci-tech bonds by urban investment companies, suggesting that the marketization transformation of these companies will accelerate [3][15]. Core Insights - Sci-tech bonds are essential financial instruments aimed at promoting technological innovation and industrial transformation, with urban investment companies increasingly participating in their issuance since the pilot program began in March 2021 [3][5]. - The issuance of Sci-tech bonds by urban investment companies has been growing annually, with a notable increase in the number of bonds issued and the total amount raised [15][16]. - The report highlights that urban investment companies are transitioning towards market-oriented operations, utilizing equity investments and industrial funds as part of their transformation strategy [3][15]. Policy Evolution - The report outlines the evolution of policies related to the issuance of Sci-tech bonds, starting from the pilot program in March 2021 to the formal launch in May 2022, and subsequent revisions in October 2023 and December 2024 [5][6]. - Key policies have been established by exchanges and regulatory bodies to guide the issuance of Sci-tech bonds, emphasizing the need for issuers to demonstrate significant technological innovation attributes or direct the raised funds towards technology-related fields [4][8]. Issuance Requirements - The report details the requirements for issuing Sci-tech bonds, which vary between exchanges and the interbank market, focusing on the issuer's creditworthiness and the intended use of raised funds [9][13]. - For exchange-listed bonds, issuers must generally maintain a debt-to-asset ratio below 80% and ensure that at least 70% of the raised funds are directed towards technology innovation [9][10]. Urban Investment Companies' Issuance Status - Since the launch of Sci-tech bonds, urban investment companies have issued a total of 117 bonds amounting to approximately 93.05 billion yuan, with a steady increase in issuance scale observed from 2021 to 2025 [16][22]. - The report notes that urban investment companies primarily issue medium to long-term bonds, with a significant portion of issuers located in Jiangsu, Zhejiang, Chongqing, and Sichuan [17][22]. Characteristics of Issuers - The report categorizes urban investment companies into Sci-tech and non-Sci-tech issuers, with the majority being non-Sci-tech, relying on the allocation of funds towards technology innovation to meet issuance requirements [26][31]. - Among the successful issuers, a small percentage are recognized as Sci-tech issuers, primarily due to their substantial R&D investments, while most non-Sci-tech issuers focus on equity and fund investments [28][31]. Financial and Business Features - The financial characteristics of urban investment companies indicate a diversified income structure, with many companies generating significant revenue from market-oriented activities rather than traditional urban investment operations [34][39]. - The report emphasizes the increasing contribution of investment income to overall profits, highlighting a trend towards greater marketization and diversification within the sector [39][48].