Group 1: Investment Ratings - No investment ratings are provided in the report. Group 2: Core Views - The report tracks the issuance of government bonds in the 53rd week of 2025, presenting the issuance progress, weekly issuance amounts, and planned issuance amounts of various types of bonds [1][3]. Group 3: Summary by Bond Type New Special-Purpose Bonds - As of December 31, the issuance progress of new special-purpose bonds was 104.4% [3]. - This week, 14.5 billion yuan of new special-purpose bonds were issued, a 12.5 billion yuan increase from the previous week, and 87.4 billion yuan is planned to be issued next week [3]. - In December, a total of 134.9 billion yuan of new special-purpose bonds were issued [4]. New General Bonds - As of December 31, the issuance progress of new general bonds was 96.3% [8]. - This week, 0 yuan of new general bonds were issued, unchanged from the previous week, and 1 billion yuan is planned to be issued next week [7]. - In December, a total of 38.4 billion yuan of new general bonds were issued [5]. Local Government Bonds - This week, the net financing scale of local government bonds was 1.74 billion yuan, a 2.06 billion yuan increase from the previous week, and 11.77 billion yuan is planned to be net - financed next week [9]. - As of December 31, the issuance progress of new local government bonds was 103.1% [10]. Treasury Bonds - This week, the net financing scale of treasury bonds was 0 yuan, a 178 billion yuan decrease from the previous week, and 395 billion yuan is planned to be net - financed next week [13]. - As of December 31, the net financing progress of treasury bonds was 98.2% [14]. Government Bonds - This week, the net financing scale of government bonds was 1.74 billion yuan, a 157.4 billion yuan decrease from the previous week, and 512.7 billion yuan is planned to be net - financed next week [15]. - As of December 31, the combined progress of treasury bond net financing and new local government bond issuance was 100.4% [15].

Group 1: Revenue Insights - The fiscal revenue at the beginning of 2026 is unlikely to show significant upward momentum, particularly for the second account revenue primarily from land sales, which may face downward risks[2] - The first account revenue, mainly from tax income, is also expected to remain flat due to the lack of a significant "tail effect" from 2025 year-end revenues[18] - The "tail effect" refers to the practice of deferring revenue recognition to the next year when year-end budget pressures are low, which is not expected to be significant for Q1 2026[19] Group 2: Debt Insights - The issuance scale of new government debt at the beginning of 2026 is not expected to be significantly high, with net financing for national bonds projected between 0.7 to 1.5 trillion yuan, compared to 1.47 trillion yuan in Q1 2025[34] - For new local government bonds, the central estimate for Q1 2026 is approximately 1.23 trillion yuan, similar to the 1.24 trillion yuan issued in Q1 2025[36] - The issuance plans from local governments indicate that the new local bond issuance will not significantly exceed the previous year's levels, with 22 provinces planning a total of 802.3 billion yuan[40] Group 3: Project Insights - The effectiveness of project initiation at the beginning of the year is crucial, with major economic provinces like Guangdong and Jiangsu expected to play a significant role in driving investment[46] - The central government has allocated approximately 295 billion yuan for early project approvals, which does not show a significant increase compared to the previous year[48] - Key indicators from major provinces regarding project investment growth will need to be confirmed in mid-January 2026, as the initial signs are mixed[49]

Report Title Localized Debt Resolution Series IV: Usage Characteristics and Outlook of New Local Bond Quotas in 2025 [1] 1. Report Industry Investment Rating Not provided in the content. 2. Report Core View - The risk prevention function of new local bonds is strengthening, weakening the negative impact of government bond supply on the bond market. This is reflected in the highest proportion of new local bond quotas allocated to self - reviewed and self - issued provinces, slower issuance progress of new local bonds, and a significant decline in the proportion of project construction bonds [2]. - In 2025, the government may not advance the use of the 2026 hidden debt replacement quota. The net financing of local bonds in November and December may be roughly equal. In 2026, fiscal policy may emphasize sustainability, leading to a stable decline in government debt increments, with a more significant decline in local debt increments. The issuance of new local bonds may accelerate compared to 2025, potentially increasing government bond supply in the first quarter of 2026 [3]. 3. Summary by Directory PART1: 2025 New Local Bond Regional Allocation and Issuance Progress 1.1 Limit Allocation - In the past two years, more new local bond quotas have been allocated to self - reviewed and self - issued provinces, reducing the impact of government bond supply on the bond market. The decline in the supply of new bonds in key provinces reduces the supply of high - coupon assets [9]. - The average growth rate of new local bond quotas in self - reviewed and self - issued provinces in the past two years has exceeded the national average. Key provinces have seen a restorative increase in quotas this year, but their average growth rate in the past two years remains negative. Ten provinces have experienced negative growth in new local bond quotas in the past two years, mostly key provinces [12]. 1.2 Issuance Progress - This year, the issuance of new local bonds has been slow, while the issuance of special refinancing bonds has been fast, aiming to strengthen risk prevention. The slow issuance of new local bonds may be due to staggered issuance with national bonds and special refinancing bonds, and a decrease in the pressure to stabilize growth [13]. - The issuance of non - project construction new local bonds has been fast, while that of project construction new local bonds has been slow, also strengthening the risk prevention function of new bonds [19]. - This year, the issuance progress of new local bonds in self - reviewed and self - issued provinces has been faster than that in other provinces and has accelerated compared to 2024. The issuance speed of new local bonds in key and other provinces has decreased compared to 2024, possibly due to an increase in their risk prevention tasks [22]. PART2: 2025 New Features of New Local Bond Usage 2.1 Two Major Categories - This year, many provinces have divided new special bonds into three uses, corresponding to two major categories: non - project construction (including supplementing fund financial resources and clearing arrears) and project construction. The proportions of these three uses are 24.6%, 16.7%, and 58.7% respectively. The proportion of project construction limits in key provinces is significantly lower [28]. - From January to October this year, the proportion of project construction bonds in the issuance of new local bonds was only 73%, a continuous decline for three years, indicating a weakening of the growth - stabilizing function of new local bonds. The proportion of project construction bonds in key provinces is the lowest, and the proportions in all three types of provinces are on a downward trend [33]. - The new or restarted sub - uses of project construction bonds this year are mainly land reserves, indicating a decline in the growth - stabilizing function of project construction special bonds. Non - project construction bonds have a new use of solving government arrears to enterprises [35]. 2.2.1 Project Construction Category - Compared with the whole year of 2024, the proportion of land reserves in project construction special bonds in the first 10 months of this year has increased by 14 percentage points, the proportion of infrastructure has decreased by 15 percentage points, the proportion of affordable housing has remained stable, government investment funds have emerged from scratch, and the proportion of new infrastructure has increased slightly [39]. 2.2.2 Project Construction Category - The restart of land reserve bonds in 2025 was originally intended to recover existing land, but in reality, they are mostly used for new land reserves. As of October 22, only 33% of the special bonds issued this year for land reserves were used for existing land reserves [43][47]. - Self - reviewed and self - issued provinces are the main issuers of land reserve bonds this year. Non - pilot provinces started issuing land reserve bonds in October, possibly due to the impact of central government approval speed [43]. 2.2.3 Project Construction Category - The scale of special bonds used for the acquisition of existing housing in 2025 is only 101 billion yuan. The scale of special bonds for the acquisition of existing housing and land is low, and they mostly target local state - owned enterprises, so their effect on reducing inventory and protecting real estate enterprises is weak [48]. 2.2.4 Project Construction Category - Using special bonds for government investment funds is beneficial for supporting science and technology innovation. This year, the scale of such special bonds may be about 125 billion yuan. Their impact on the bond market is limited [52][57]. 2.3.1 Non - Project Construction Category - The uses of debt - repayment new special bonds have expanded this year, and the scale has increased. "Solving government arrears to enterprises" and "supplementing government fund financial resources" are essentially debt - repayment, but the types of debts repaid are different [58]. - It is estimated that 567.9 billion yuan of arrears - clearing special bonds will be issued this year. From 2026 to 2028, 1367.9 billion, 1083.9 billion, and 800 billion yuan of new special bonds may be used for debt - repayment respectively [64]. 2.3.2 Non - Project Construction Category - Only 26 billion yuan of special bonds for capital replenishment of small and medium - sized banks were issued in the first 10 months of this year, and there is still a remaining quota of 20 billion yuan. Such bonds may be issued again by the end of this year [65]. PART3: In - Year and 2026 Outlook 3.1 In - Year Outlook - The progress of using the remaining quota is slow, so it is unlikely that the government will advance the use of the 2026 hidden debt replacement quota this year. Considering the remaining quota, the net financing of local bonds in November and December may be roughly equal, about 516.4 billion and 516.7 billion yuan respectively [75]. 3.2 2026 Outlook - The first year of the Five - Year Plan does not necessarily correspond to fiscal stimulus. It mainly depends on the pressure to stabilize growth. From a historical perspective, the first year of the Five - Year Plan does not always see fiscal stimulus [76]. - In 2026, fiscal policy may emphasize sustainability, leading to a stable decline in government debt increments. The proportion of local debt in incremental government debt may decline [84]. - The government debt increment in 2026 may be 14 trillion yuan, a decrease of about 0.3 trillion yuan compared to 2025. The local debt increment may be 7.2 trillion yuan, a decrease of about 0.5 trillion yuan compared to 2025 [87]. - The issuance of new local bonds in 2026 may accelerate compared to this year, and the issuance of debt - repayment new bonds may be more front - loaded, potentially increasing government bond supply in the first quarter of 2026 [88]. - The proportion of new local bonds used for project construction in 2026 may decline slightly compared to 2025, weakening the growth - stabilizing function. The scale of project construction special bonds used for new infrastructure and government investment funds may increase, but their impact on economic growth may be limited [94].