Group 1 - The central government has set a new local government special bond limit of 39 billion yuan for this year, an increase of 10 billion yuan from the previous year, aimed at supporting local governments in addressing key areas and filling gaps [1] - As of April 18, 2023, a total of 170 new special bonds have been issued by various regions, amounting to approximately 654.37 billion yuan, with the first quarter alone accounting for 634.12 billion yuan [1] - The issuance of special bonds is expected to accelerate in the second quarter to meet project funding needs and support economic growth and investment plans [2] Group 2 - The issuance, allocation, and utilization of special bonds in China have shown significant achievements, establishing a long-term mechanism for issuance, distribution, project evaluation, risk warning, and information disclosure [2] - The characteristics of special bond issuance in the second quarter are expected to include a stronger emphasis on the applicability of project lists, continuous expansion of issuance scale, and a focus on matching the physical workload generated by the bonds with their effectiveness [2]

Core Viewpoint - Local government bond issuance has reached a record high in the first seven months of the year, with a total of 6.7 trillion yuan, primarily aimed at refinancing old debts and funding major projects [1][2]. Group 1: Bond Issuance and Purpose - In the first seven months, approximately 3.4 trillion yuan of refinancing bonds were issued, marking a 65% year-on-year increase, while new bonds totaled about 3.3 trillion yuan, up approximately 55% [1][2]. - More than half of the bond proceeds are allocated to repay old debts, with nearly half directed towards major project construction [1]. - The issuance of special bonds has been significant, with about 2.8 trillion yuan in new special bonds issued, accounting for over 60% of the annual target of 4.4 trillion yuan [2]. Group 2: Debt Management and Financial Impact - The average interest cost of replaced hidden debts has decreased by over 2.5 percentage points, significantly easing repayment pressure and releasing fiscal space for development and public welfare [2]. - Special new bonds, totaling approximately 755 billion yuan, are specifically aimed at resolving hidden debt issues and addressing overdue payments to enterprises [2]. Group 3: Project Funding Allocation - Of the nearly 2 trillion yuan allocated for project construction from new special bonds, approximately 26.37% is directed towards municipal and industrial park infrastructure, 17.63% towards transportation infrastructure, and 13.03% towards land reserve projects [8]. - The issuance of land reserve special bonds has surged, exceeding 260 billion yuan, aimed at recovering idle land and stabilizing the real estate market [8]. Group 4: Future Expectations and Efficiency - The central government has called for accelerated bond issuance and improved fund utilization efficiency, with expectations that local governments will complete the issuance of 4.4 trillion yuan in new special bonds by the end of October [9]. - The State Council has significantly relaxed the restrictions on the use of special bond funds, allowing for greater flexibility and autonomy in project funding [10]. - As of June 2025, the total local government debt is projected to be 51.95 trillion yuan, remaining below the debt ceiling of approximately 57.99 trillion yuan, indicating manageable debt risk [10].