Group 1: Credit Bond Strategy - The credit bond market is expected to continue in a volatile state, with a focus on interest rate strategies and band trading being more favorable than pure selection of varieties [5][38] - The strategy suggests focusing on short to medium-term credit bonds and high-grade long-term bonds to seek opportunities for interest rate compression [5][38] - The recommendation is to increase allocation in high-grade bonds from local government financing vehicles, real estate, and stable industries during market adjustments [5][38] Group 2: Local Government Financing Bonds - The transformation of local government financing vehicles is entering a complex phase, with potential pricing discrepancies as platforms adapt to new regulations [2][43] - The issuance of local government bonds is expected to remain low due to strict regulatory oversight and the ongoing transition of platforms [2][43] - Focus on short to medium-term bonds from regions with stable cash flows, particularly in Guangdong, Hubei, Jiangsu, and Henan, is recommended [2] Group 3: Financial Bonds and Varieties - High-grade perpetual bonds can be traded in response to interest rate fluctuations, but the trading space is limited and requires high trading standards [3][39] - The strategy includes focusing on high-grade bonds with a maturity of 3-5 years for stable institutions, while actively trading lower-grade bonds during market adjustments [3][39] - The expansion of TLAC non-capital instruments and their comparison with secondary capital bonds is highlighted as an area of interest [3][39] Group 4: Industrial Bonds - Industrial bonds have shown some recovery in profitability, but performance remains varied across sectors, with strong performance in automotive, machinery, and utilities, while real estate and construction sectors lag [4] - The recommendation is to focus on high-quality state-owned enterprises and stable private enterprises for medium-term investments [4] Group 5: Real Estate Bonds - The real estate sector is under pressure, with a recommendation to focus on high-grade bonds from state-owned enterprises while monitoring the recovery of the sector [4] - The potential for policy support in the real estate market could enhance recovery in core cities, but caution is advised for lower-tier cities [4] Group 6: Asset-Backed Securities (ABS) and Public REITs - The market for consumer finance ABS is expanding, with opportunities for variety exploration in a volatile market [3][39] - Public REITs are recommended to balance opportunities in both primary and secondary markets, focusing on stable projects [3][39]

Group 1: Overview of Credit Bonds - As of May 12, 2025, the total outstanding credit bond market, including financial bonds, is 431396 billion, with local government bonds (城投债) at 186206 billion, industrial bonds at 103498 billion, and financial bonds at 141692 billion [8][12] - Among local government bonds, 63480 billion are valued above 2.2%, accounting for 34.1% of the total [10][12] - The report categorizes local government bonds into four tiers based on their valuation and distribution across provinces [16] Group 2: Distribution of Local Government Bonds - In Jiangsu, Zhejiang, Anhui, and Fujian, the proportion of bonds valued above 2.2% is below 30%, but the total scale is relatively large, with Jiangsu having a rich supply of 1-3 year AA(2) bonds [10][17] - In Sichuan, Hunan, Hubei, and Jiangxi, the valuation is in the mid-range, with 30-40% of bonds valued above 2.2%, and Sichuan alone has over 4800 billion in such bonds [10][21] - In Henan, Shandong, and Shaanxi, the overall valuation is higher, with bonds valued between 2.29% and 2.40%, and the proportion of bonds above 2.2% ranges from 47% to 63% [10][12] Group 3: Industrial Bonds - As of May 12, 2025, the total outstanding industrial bonds amount to 103498 billion, with 21368 billion valued above 2.2%, representing 20.6% of the total [3][12] - The real estate sector has over 5300 billion in bonds valued above 2.2%, while sectors like construction, non-bank financials, coal, steel, and retail also show significant amounts [3][12] Group 4: Financial Bonds - The total outstanding financial bonds is 141692 billion, with 9093 billion valued above 2.2%, which is 6.4% of the total [4][12] - Among bank subordinated bonds, over 3400 billion are valued above 2.2%, primarily concentrated in bonds with a maturity of over three years [4][12] - Insurance bonds valued above 2.2% exceed 1500 billion, with major issuers including Ping An Life, Taikang Life, and Sunshine Life [4][12]

Report Industry Investment Rating - Not provided in the content Core Viewpoints - Despite the recent market fluctuations caused by quarter - end liquidity, the medium - to long - term allocation value of credit bonds remains intact. High - grade, long - duration credit bonds show strong resilience, and the narrowing decline in wealth management scale indicates stabilizing market sentiment. The supply - demand pattern of the credit bond market is relatively stable, and the yield - mining potential of credit bonds is prominent. The core logic of credit spread compression still holds, and investors are advised to focus on medium - to high - grade urban investment bonds and industrial bonds in stable industries [2][15] Summary by Directory 1. Credit Bond Configuration Value Unchanged by Quarter - End Disturbance - High - grade, long - term credit bond varieties have significant gains. From March 24th to 28th, the total full - price index of national bonds rose 0.25%, outperforming credit bonds (0.11%) and financial bonds (0.09%). Among them, the full - price index of national bonds over 10 years rose 0.72%, and the index of AAA credit bonds over 10 years rose 1.02% [16] - The scale of wealth management products decreased seasonally, but the decline was narrower year - on - year. In the 13th week of 2025, the scale change was - 0.49 trillion yuan, smaller than - 1.41 trillion yuan in 2024 and - 1.10 trillion yuan in 2023 [19] 2. Market Trading Structure and Selling Pressure - At the end of the month, the selling pressure was relieved. The proportion of GVN in interest - rate bonds dropped from 61.35% on March 17th to 32.96% on March 26th, and then rebounded to 48.54% on March 27th. The proportion of GVN in credit bonds was relatively stable, falling from 39.90% on March 17th to 19.20% on March 20th and rising to 31.48% on March 28th [24] 3. Coupon Advantage of Bonds - Brokerage bonds and insurance bonds have relative coupon advantages. This week, short - end bond yields generally declined. For example, the yields of 1 - month urban investment bonds and medium - short - term notes decreased by 3 bp and 1 bp to 1.97% and 2.01% respectively, and the yield of secondary capital bonds decreased significantly by 9 bp to 1.92% [27] 4. Credit Spread Compression Logic - The core logic supporting credit spread compression still holds. Against the backdrop of the "asset shortage", credit bonds are an important choice for capital allocation. The debt resolution work has reduced the credit risk of urban investment platforms. In the second quarter, the supply pressure of credit bonds eases, and the allocation demand is expected to pick up. 3 - year AA+ urban investment bonds are more cost - effective, and for industrial bonds, defensive industries such as public utilities and transportation are recommended [45] 5. Institutional Behavior and Allocation Strategies - Funds and money market funds have continuously increased their holdings in the past two weeks, and insurance companies have allocated long - end local government bonds. Funds have net - bought 305.42 billion yuan in 1 - year credit bonds, 210.95 billion yuan in 3 - year credit bonds, and 143.82 billion yuan in 5 - year credit bonds. Insurance companies have net - bought 275.69 billion yuan in 20 - 30 - year local government bonds and 22.79 billion yuan in 7 - 10 - year credit bonds. Money market funds have net - bought 2470.26 billion yuan in inter - bank certificates of deposit [39] - It is recommended that investors deploy along three main lines: seize the interest - rate elasticity of 3 - year AA+ urban investment bonds, explore mis - valued opportunities in non - bank varieties such as brokerage subordinated bonds and insurance capital bonds, and pay attention to the net - value restoration opportunities of wealth management subsidiaries' products with a low break - even rate. It is necessary to be vigilant about the economic recovery expectation, and the duration strategy should be moderately flexible [9]