Core Views - The report indicates that the yield rates of credit bonds have mostly risen, with the overall change ranging from -5 BP to 5 BP during the period from September 15 to September 21 [2] - The issuance scale of credit bonds has increased on a month-on-month basis, with corporate bonds maintaining zero issuance while other varieties saw an increase in issuance amounts [2] - The net financing amount of credit bonds has also increased, with corporate bonds and short-term financing bonds showing positive net financing, while company bonds, medium-term notes, and directional tools showed a decrease [2] Market Performance - The transaction amount of credit bonds in the secondary market has increased, with all varieties seeing a rise in transaction amounts [2] - The credit spreads have shown differentiation due to the varied performance of interest rate bonds, with short-term yields widening and long-term yields narrowing [2] - The report notes that the credit spreads for short-term bonds remain at historical lows, while long-term bonds have seen an increase in spreads, particularly for 5-year and 7-year AAA-rated bonds, which have reached around the 10% and 20% percentiles respectively, indicating high allocation value [2] Investment Strategy - The report suggests that despite the recent market fluctuations, the conditions for a comprehensive bear market in credit bonds are not sufficient, and yields are expected to enter a downward channel in the long term [2] - It recommends an active allocation strategy, particularly focusing on the trends in interest rate bonds and the coupon value of individual bonds [2] - The report emphasizes the importance of aligning investment strategies with market trends and adjusting trading strategies accordingly, while also monitoring the impact of growth-stabilizing policies on the bond market [2][3] Real Estate Market Insights - The report highlights that the central and local governments are actively optimizing real estate policies, which is expected to positively influence the stabilization of the real estate market [3] - It notes that the recovery of the real estate market will take time, and the sales recovery process will significantly impact bond valuations [3] - The focus for investment should be on high-quality central enterprises, state-owned enterprises, and well-guaranteed private enterprise bonds, with a potential for yield enhancement through longer durations [3] City Investment Bonds - The report states that the likelihood of default on city investment bonds is low under the current backdrop of stabilizing growth and preventing systemic risks [4] - It suggests that city investment bonds remain a key allocation target, although there may be valuation volatility risks during the transition of financing platforms [4] - Future opportunities may arise from the reform and transformation of "entity-type" financing platforms [4]

1. Report Industry Investment Rating There is no information provided regarding the industry investment rating in the documents. 2. Core Viewpoints of the Report - During the period from September 15 to September 21, the issuance guidance rates announced by the National Association of Financial Market Institutional Investors mostly increased, with an overall change range of -5 BP to 5 BP. The issuance scale of credit bonds increased month - on - month, while corporate bonds remained at zero issuance, and the issuance amounts of other varieties increased. The net financing of credit bonds increased month - on - month, with an increase in the net financing of corporate bonds and commercial paper, and a decrease in the net financing of corporate bonds, medium - term notes, and private placement notes. The trading volume of credit bonds in the secondary market increased month - on - month, and the yields of most credit bonds rose. Credit spreads showed a differentiated trend, with short - to - medium - term spreads narrowing and long - term spreads widening. [1][61] - On September 19, the Shanghai, Shenzhen, and Beijing Stock Exchanges issued a notice to optimize bond repurchase business. When the closing price of corporate bonds drops by 5% compared to the 20th trading day before, the repurchaser can repurchase bonds to stabilize market fluctuations. [2][64] - The central and local governments are actively optimizing real estate policies, which are playing a positive role in stabilizing the real estate market. For real estate bonds, investors with high - risk tolerance can consider early layout, focusing on high - quality bonds of central and state - owned enterprises and some high - quality private enterprises. [2][65][66] - Against the background of stable growth and prevention of systemic risks, the probability of urban investment bond defaults is low, and they can still be a key allocation variety. However, during the process of local financing platform clearance and transformation, some urban investment bonds may face valuation fluctuations. [3][66] 3. Summary According to the Directory 3.1 First - level Market Situation 3.1.1 Issuance and Maturity Scale - From September 15 to September 21, a total of 407 credit bonds were issued, with an issuance amount of 326.433 billion yuan, a month - on - month increase of 25.20%. The net financing of credit bonds was 88.638 billion yuan, an increase of 17.911 billion yuan month - on - month. [12] - Corporate bonds remained at zero issuance, with a net financing of - 4.241 billion yuan, an increase of 2.288 billion yuan month - on - month. The issuance amount of corporate bonds, medium - term notes, commercial paper, and private placement notes increased, but the net financing of corporate bonds, medium - term notes, and private placement notes decreased. [12] 3.1.2 Issuance Interest Rates - The issuance guidance rates announced by the National Association of Financial Market Institutional Investors mostly increased, with an overall change range of -5 BP to 5 BP. The rate changes varied by term and rating. [14] 3.2 Second - level Market Situation 3.2.1 Market Trading Volume - From September 15 to September 21, the total trading volume of credit bonds was 896.955 billion yuan, a month - on - month increase of 22.76%. The trading volumes of all varieties increased. [17] 3.2.2 Credit Spreads - For medium - and short - term notes, corporate bonds, and urban investment bonds, the credit spreads showed a differentiated trend, with 1 - year and 3 - year spreads narrowing and 5 - year and 7 - year spreads widening. [20][28][38] 3.2.3 Term Spreads and Rating Spreads - For AA+ medium - and short - term notes, the 3Y - 1Y term spread narrowed, while the 5Y - 3Y and 7Y - 3Y spreads widened. For rating spreads, the 3 - year (AA - )-(AAA) and (AA)-(AAA) spreads remained unchanged, and the (AA+)-(AAA) spread narrowed. [45] - For AA+ corporate bonds, the 3Y - 1Y, 5Y - 3Y, and 7Y - 3Y term spreads widened. For rating spreads, the 3 - year (AA - )-(AAA) and (AA)-(AAA) spreads widened, and the (AA+)-(AAA) spread remained unchanged. [50] - For AA+ urban investment bonds, the 3Y - 1Y term spread narrowed, while the 5Y - 3Y and 7Y - 3Y spreads widened. For rating spreads, the 3 - year (AA - )-(AAA) and (AA)-(AAA) spreads widened, and the (AA+)-(AAA) spread remained unchanged. [53] 3.3 Credit Rating Adjustments and Default Bond Statistics 3.3.1 Credit Rating Adjustment Statistics - From September 15 to September 21, the rating of one company was downgraded. [57] 3.3.2 Default and Extension Bond Statistics - Wuhan Contemporary Science & Technology Investment Co., Ltd.'s credit bond "H20 Technology 4" defaulted, with a default balance of 650 million yuan. There were no credit bond extensions during this period. [59][60] 3.4 Investment Views - In terms of absolute returns, the supply shortage and strong allocation demand support the strength of credit bonds. Although fluctuations are inevitable, the conditions for a full - scale bear market in credit bonds are still insufficient. In the long run, yields will enter a downward channel, and the strategy of increasing allocation during adjustments is still feasible. [1][61] - In terms of relative returns, due to the low historical levels of rating spreads, credit risk - taking is not effective at present. High - grade long - term bonds have certain advantages, and the duration can be appropriately extended, but the rhythm needs to be grasped. [1][61] - For real estate bonds, with the market gradually stabilizing, investors with high - risk tolerance can consider early layout, focusing on high - quality bonds of central and state - owned enterprises and some high - quality private enterprises. [2][66] - For urban investment bonds, they can be a key allocation variety, but attention should be paid to the valuation fluctuations during the clearance and transformation of local financing platforms. [3][66]

Group 1: Primary Market - In the week from September 8 to September 12, 2025, a total of 303 credit bonds were issued, with a total issuance scale of 372.67 billion yuan, representing a week-on-week increase of 123.89% [4] - Among the issued bonds, industrial bonds accounted for 120 issues with an issuance scale of 123.70 billion yuan, up 124.04% week-on-week, making up 33.19% of the total issuance [4] - Local government bonds had 136 issues with an issuance scale of 92.58 billion yuan, up 18.32% week-on-week, representing 24.84% of the total [4] - Financial bonds had 47 issues with an issuance scale of 156.40 billion yuan, up 373.94% week-on-week, accounting for 41.97% of the total [4] - The average issuance term for credit bonds was 2.97 years, with industrial bonds averaging 2.15 years, local government bonds 3.98 years, and financial bonds 2.20 years [4] - The overall average coupon rate for credit bonds was 2.27%, with industrial bonds at 2.19%, local government bonds at 2.46%, and financial bonds at 1.88% [4] - Six credit bonds were canceled during the week [4] Group 2: Secondary Market - In terms of credit spread, the largest increase for AAA-rated industries was in pharmaceuticals, up 5.6 basis points; for AA+-rated industries, the largest increase was in chemicals, up 6.9 basis points, while the largest decrease was in steel, down 49.2 basis points [5] - For AA-rated industries, the largest increase was in real estate, up 12.7 basis points, while the largest decrease was in commercial trade, down 1.5 basis points [5] - Among local government bonds, the largest increase in AAA-rated credit spreads was in Shaanxi, up 7.7 basis points, while the largest decrease was in Inner Mongolia, down 1.9 basis points [5] - For AA+-rated credit spreads, the largest increase was in Fujian, up 8.8 basis points, while the largest decrease was in Jilin, down 12.5 basis points [5] - The largest increase for AA-rated credit spreads was in Hebei, up 26.3 basis points, while the largest decrease was in Yunnan, down 0.9 basis points [5] Group 3: Trading Volume - The total trading volume of credit bonds was 1,199.55 billion yuan, representing a week-on-week decrease of 6.75% [6] - The top three categories by trading volume were commercial bank bonds, corporate bonds, and medium-term notes [6] - Commercial bank bonds had a trading volume of 379.95 billion yuan, down 15.44%, accounting for 31.67% of the total trading volume [6] - Corporate bonds had a trading volume of 332.49 billion yuan, up 6.12%, making up 27.72% of the total [6] - Medium-term notes had a trading volume of 272.84 billion yuan, down 4.65%, representing 22.75% of the total [6]

Core Viewpoint - The recent regulatory measures aim to address the increasing trend of low-cost underwriting in the interbank bond market, which has led to distorted pricing and non-market-based issuance practices [1][2][3] Group 1: Regulatory Changes - The China Interbank Market Dealers Association issued a new notification on July 30 to strengthen self-regulation in the bond underwriting process, focusing on issues like pricing distortion and interference in the issuance process [1][2] - The notification requires lead underwriters to establish internal management systems for pricing and prohibits bidding below cost for bond projects [2][6] Group 2: Investigation and Cases - The association has initiated self-regulatory investigations into six lead underwriters involved in the low-cost underwriting of Guangfa Bank's capital bonds, which raised concerns in the market [2][3] - Guangfa Bank's recent bond issuance of 35 billion yuan had an average underwriting fee of only 63448 yuan, translating to an average fee rate of 0.02 basis points, which is significantly below cost [3][4] Group 3: Market Dynamics - The trend of low-cost underwriting is exacerbated by the decline in issuance rates and the reduction of high-fee projects, particularly in the real estate and local government financing sectors [5][6] - The competitive nature of the market has led underwriters to prioritize scale over profitability, often resulting in fees that do not cover basic operational costs [4][5] Group 4: Compliance and Reporting - The notification emphasizes the need for market-based pricing and prohibits practices that distort market prices, such as pre-agreed interest rates and improper benefits [8][9] - The association will monitor compliance and handle complaints regarding violations of self-regulatory rules, with potential penalties for non-compliance [9]

Core Viewpoint - The recent notice issued by the interbank market trading association aims to regulate the bond issuance and underwriting process, addressing issues such as pricing distortions and non-market-based issuance practices [1][4]. Group 1: Regulatory Measures - Strengthening underwriting quote management in the interbank bond market, requiring main underwriters to establish internal management systems and not to participate in bidding with quotes below cost [1][2]. - Standardizing the subscription requirements for bond bookkeeping, encouraging early submission of subscription demands and ensuring compliance with communication tool regulations [2][3]. - Improving the pricing mechanism for debt financing tools, ensuring that the pricing range reflects comparable bond rates or market fair price levels [2][3]. Group 2: Information Disclosure and Management - Enhancing information disclosure for debt financing tools, with main underwriters required to improve service quality and disclose relevant details regarding balance underwriting and self-investment [2][4]. - Strengthening distribution management for debt financing tools, ensuring that distribution-related information is accurately recorded [2][3]. Group 3: Complaint and Reporting Mechanism - Establishing a complaint and reporting mechanism for violations during the issuance and underwriting process, including interference in pricing and malicious exclusion of market-based subscription orders [4][5]. - The association has noted ongoing issues in the market, such as extreme low pricing for underwriting services, which has sparked discussions about excessive competition and its impact on market pricing [5]. Group 4: Market Dynamics - The recent regulatory actions are seen as a response to long-standing issues in the bond underwriting market, where firms engage in irrational competition by offering extremely low fees to gain market share [5]. - The association's measures aim to eliminate non-market-based practices in the bond issuance process and enhance transparency in pricing [5].

Core Viewpoint - The China Interbank Market Dealers Association has issued a notification to regulate the issuance and underwriting of bonds in the interbank market, effective from August 11, 2025, emphasizing the need for improved management of underwriting quotes and the establishment of internal management systems by lead underwriters [1][2]. Group 1: Underwriting and Pricing Management - The notification mandates that lead underwriters must establish internal management systems for underwriting quotes, ensuring that quotes are based on comprehensive project cost assessments and not below cost [1]. - Issuers are required to set reasonable selection criteria for bids based on market principles, without interfering with the independent pricing decisions of lead underwriters [1][2]. Group 2: Subscription and Information Disclosure - The notification encourages investors to submit subscription requests early, and underwriters must use approved communication tools to maintain records of subscription information [1][2]. - Any withdrawal or modification of subscription orders within one hour before the closing time must be announced in real-time and reported to the association in writing before the trading circulation date [1]. Group 3: Pricing Mechanism and Distribution Management - Issuers and lead underwriters must determine the pricing range for bond issuance based on market principles and comparable bond rates, ensuring that the pricing reflects fair market levels [2]. - Lead underwriters are required to enhance the quality and standardization of market-based issuance services, with specific disclosure requirements for balance underwriting and self-investment [2][3]. Group 4: Underwriter Selection and Complaints Management - For short-term and medium-term financing instruments, issuers can select a limited number of lead underwriters based on the issuance scale, with specific limits set for different issuance sizes [3]. - The association will accept complaints regarding violations of laws and self-regulatory rules during the issuance process, with verified cases recorded in integrity archives for public disclosure [3].

Group 1: Primary Market - In the week from July 21 to July 25, 2025, a total of 414 credit bonds were issued, with a total issuance scale of 592.83 billion, representing a week-on-week increase of 47.80% [3] - Among the issued bonds, industrial bonds accounted for 202 issues with a scale of 219.28 billion, a week-on-week increase of 24.66%, making up 36.99% of the total issuance [3] - City investment bonds totaled 166 issues with a scale of 109.63 billion, a week-on-week increase of 2.90%, representing 18.49% of the total [3] - Financial bonds had 46 issues with a scale of 263.92 billion, a week-on-week increase of 122.44%, accounting for 44.52% of the total [3] - The average issuance term for credit bonds was 3.35 years, with industrial bonds at 3.38 years, city investment bonds at 3.75 years, and financial bonds at 1.66 years [3] - The overall average coupon rate for credit bonds was 2.08%, with industrial bonds at 2.01%, city investment bonds at 2.25%, and financial bonds at 1.83% [3] - A total of 23 credit bonds were canceled during the week [3] Group 2: Secondary Market - Credit spreads increased across industries, with the largest increase in AAA-rated industries being in pharmaceuticals, which rose by 7.6 basis points, while electronics saw a decrease of 1.5 basis points [4] - For AA+ rated industries, real estate experienced the largest increase in credit spreads by 8.9 basis points, while building materials decreased by 15.3 basis points [4] - In the AA-rated category, electronics had the largest increase in credit spreads by 7.5 basis points, while building materials decreased by 0.5 basis points [4] - In terms of city investment bonds, the largest increase in AAA-rated credit spreads was in Shaanxi, which rose by 5.3 basis points, while Yunnan saw a decrease of 1.2 basis points [4] - For AA+ rated credit spreads, Fujian had the largest increase of 6.4 basis points, while Qinghai decreased by 1.2 basis points [4] - The largest increase in AA-rated credit spreads was in Hubei, which rose by 6.5 basis points, while Sichuan decreased by 2 basis points [4] Group 3: Trading Volume - The top three credit bonds by trading volume were commercial bank bonds, corporate bonds, and medium-term notes [5] - Commercial bank bonds had a trading volume of 573.26 billion, a week-on-week increase of 35.93%, accounting for 37.04% of the total trading volume [5] - Corporate bonds had a trading volume of 368.42 billion, a week-on-week increase of 1.83%, representing 23.81% of the total [5] - Medium-term notes had a trading volume of 327.90 billion, a week-on-week decrease of 4.54%, making up 21.19% of the total [5]

Market Overview - The bond market experienced accelerated adjustments with increased redemption pressure during the week of July 21-25, leading to a tightening of market funds initially, followed by a loosening towards the end of the week [1] - The 10-year government bond yield broke above 1.70% for the first time since late May, indicating significant adjustment pressure [1] - The stock market showed positive sentiment, with indices reaching new highs for the year, which diverted some funds from the bond market [1] Weekly Review - On July 21, the LPR remained unchanged as expected, with a generally loose funding environment, but bond yields continued to rise [2] - The 10-year government bond yield rose to 1.677% on July 21, up 1.3 basis points from the previous week, and continued to increase throughout the week, reaching 1.745% by July 24 [2] - By July 25, after a significant net injection of over 600 billion yuan by the central bank, the bond market showed signs of recovery, with the 10-year government bond yield closing at 1.73% [2] Bond Futures - The bond futures market also saw fluctuations, with the 10-year government bond contract T2509 closing at 108.18, down 0.07% for the week [4] - Other maturities, such as the 5-year and 30-year contracts, also experienced declines, with weekly drops of 0.04% and 0.48% respectively [4] Convertible Bonds - The China Convertible Bond Index closed at 463.57, up 0.11% on July 25, with a weekly increase of 2.14% [5] - The trading volume for convertible bonds increased significantly, with a total of 2,443 million hands traded, amounting to 403.4 billion yuan, a week-on-week increase of 253 million hands [5] Bond Issuance - A total of 84 bonds were issued in the market, with a total scale of 939.805 billion yuan, an increase of 283.312 billion yuan from the previous week [6] - The Ministry of Finance issued 5 government bonds, with a total issuance scale increasing by 49.9 billion yuan compared to the previous week [8] Monetary Policy - The central bank conducted a total of 17,268 billion yuan in 7-day reverse repos, with a net injection of 6,018 billion yuan on July 25 [15] - The weighted average rate for R001 fell to 1.55%, while R007 rose to 1.69% due to month-end funding effects [17] International Market - U.S. Treasury yields showed slight fluctuations, with the 10-year yield falling to 4.38% [19] - European bond markets reacted to the European Central Bank's decision to maintain interest rates, leading to increased yields in the German and Italian bonds [22] Industry Insights - Analysts suggest that the recent market adjustments are primarily driven by changes in risk appetite, funding fluctuations, and shifts in trading positions [32] - The "anti-involution" measures and their impact on demand are critical factors to monitor for the bond market's medium-term outlook [32]

Macro and Strategy Research - In May 2025, China's exports in USD terms grew by 4.8% year-on-year, down from 8.1% in the previous month, while imports fell by 3.4%, compared to a decline of 0.2% previously. The trade surplus reached USD 103.22 billion, up from USD 96.18 billion [4][5] - The slowdown in export growth is attributed to high base effects and global economic downturn concerns, with the global manufacturing PMI remaining below 50 for three consecutive months. Exports to the US saw a significant decline of 34.5%, influenced by new tariffs and cautious sentiment among traders [4][5] - Import demand showed weakness, with agricultural imports rising by 17.9% year-on-year, while other major commodities experienced negative growth, indicating a need for policy support to boost domestic demand [5] Fixed Income Research - For the period from June 2 to June 8, 2025, the issuance of credit bonds increased, while transaction amounts decreased. The net financing amount for credit bonds rose, with corporate bonds and medium-term notes seeing increases, while company bonds and short-term financing bonds saw reductions [6][8] - The overall yield on medium and short-term notes and corporate bonds declined, while city investment bonds showed mixed results. The credit spread for medium and short-term notes widened, indicating a complex market environment [8] - The report suggests that despite short-term fluctuations, the long-term trend for yields is downward, and investors should focus on timing their investments and monitoring interest rate trends [8] Industry Research - In the steel sector, demand is expected to decline as the off-season deepens, leading to a potential accumulation of steel inventory. The short-term outlook remains weak for steel prices [10][11] - For copper, tight supply at the mine level supports prices, but the lack of demand during the off-season may lead to volatility, particularly influenced by US-China trade negotiations [10][11] - The aluminum market faces uncertainty due to macroeconomic factors, while low domestic inventory provides some price support. Overall, aluminum prices are expected to fluctuate in the short term [10][11] - Gold prices are bolstered by international trade tensions, US interest rate expectations, and geopolitical factors, with a focus on macroeconomic data and trade developments [10][11] - The lithium market is experiencing oversupply, leading to price weakness, while the rare earth sector is positioned for long-term growth due to policy support and emerging demand from robotics and renewable energy [10][11]