1. Report Industry Investment Rating - Not provided in the document 2. Core Views of the Report - In Q4 2025, the bond market valuation recovered, and the net asset value of the bond funds in the whole market stopped falling and rebounded. However, the "asset shortage" pattern continued, the yield of credit bonds declined again, and the supply of desirable medium - to - high - yield assets shrank. Against this background, bond funds actively explored returns in terms of variety and duration in Q4, while remaining relatively cautious about credit downgrading [5]. - From the overall situation of bond fund heavy - holdings, the return range was further compressed, and institutions tended to adopt conservative strategies. The yields of the heavy - holding bond issuers were highly concentrated in the low - return range below 1.8%, and the scale of high - yield assets above 2.5% continued to shrink [5]. - For heavy - holding of urban investment bonds, the regional level showed a downward trend, with a preference for short - term durations. Zhejiang and Jiangsu were still the core heavy - holding regions, but the allocation intensity decreased. Institutions' preference for regions such as Sichuan, Shanghai, and Hunan increased. In terms of term distribution, the scale of each province was mainly concentrated around 1 - year, and as the term lengthened, the holding preference converged significantly towards strong provinces [5]. - For heavy - holding of financial bonds, bank Tier 2 and perpetual bonds dominated the allocation, and there was an obvious trend of variety downgrading. Financial bonds accounted for 72% of all heavy - holding credit bonds, with bank Tier 2 and perpetual bonds as the core varieties, and the allocation was relatively concentrated in the medium - to - high - yield range of 2.0% - 2.5%. In terms of term, a dumbbell - shaped allocation was preferred [5]. - For heavy - holding of industrial bonds, the allocation was concentrated in core industries, and institutions were more cautious about real - estate bonds. Non - bank finance and public utilities were the top two industries in terms of total market value of holdings, and were significantly increased in holdings compared with the previous period. Industries such as real estate, transportation, and coal were significantly reduced in holdings [5]. 3. Summary According to Relevant Catalogs 3.1 Bond Fund Heavy - Holding Overview 3.1.1 Overall Situation - As of the end of Q4 2025, there were 3,993 bond - type funds in the whole market, with a total scale of 11.10 trillion yuan, an increase of 0.36 trillion yuan compared with the end of the previous quarter. Bond - type funds were mainly medium - and long - term pure - bond funds, presenting a structure characterized by "dominated by medium - and long - term pure - bond funds and supplemented by hybrid bond funds" [11]. 3.1.2 Credit Bond Heavy - Holding from a Return Perspective - Most bond funds had a stable investment style and tended to adopt relatively conservative investment strategies. The yields of heavy - holding bond issuers were highly concentrated in the range below 1.8%. The supply of high - yield assets continued to shrink, and the high - yield assets above 2.5% further contracted compared with Q3 2025 [19]. - In Q4, the "asset shortage" continued, and the yields of credit bonds declined again. The concentration range of heavy - holding bond yields shifted downward. Compared with Q3, the balance of heavy - holding bonds with issuer yields below 1.8% increased significantly, while the holding balances of heavy - holding bonds in the ranges of 1.8 - 2.0%, 2.0 - 2.5%, and above 2.5% decreased to varying degrees [19]. 3.1.3 Types of Bond Fund Heavy - Holding Bonds and Their Performance in Different Dimensions - In Q4 2025, bond fund heavy - holding bonds generally showed a configuration trend of low - return concentration and high - return contraction. Financial bonds dominated with over 540 billion yuan, with bank Tier 2 and perpetual bonds as the core configuration. Industrial bonds tended to have medium - to - low returns, and urban investment bonds were concentrated in the 1.8% - 2.0% range [29]. - In terms of implicit rating distribution, financial and industrial bonds preferred high - rating issuers, while urban investment bonds showed an obvious downward trend. In Q4, incremental allocation was concentrated in high - rating bonds, and institutions were relatively cautious about credit downgrading [32]. 3.2 Characteristics of Urban Investment Bond Heavy - Holding 3.2.1 Regional and Hierarchical Characteristics of Heavy - Holding Urban Investment Bonds - In Q4 2025, the heavy - holding regions of urban investment bonds showed a certain downward trend, including prefecture - level cities in key provinces, district - level cities in non - key provinces, and park - level areas in municipalities. Zhejiang and Jiangsu were still the core heavy - holding regions, but the allocation intensity decreased. Institutions' preference for regions such as Sichuan, Shanghai, and Hunan increased [38]. 3.2.2 Term Characteristics of Heavy - Holding Urban Investment Bonds - Urban investment bonds generally preferred short - term durations. As the term lengthened, the holding preference converged significantly towards strong provinces. In Q4 2025, the term distribution of urban investment bond heavy - holdings was significantly differentiated, with the scale of each province mainly concentrated around 1 - year. The overall heavy - holding duration lengthened, but institutions were still cautious about ultra - long - term urban investment bonds [43]. 3.2.3 Analysis of the Top 20 Heavy - Holding Urban Investment Bond Issuers - The top 20 heavy - holding urban investment bond issuers in Q4 2025 were mainly medium - level prefecture - level platforms, with less obvious head - concentration characteristics. In Q4, the number of provincial - level platforms increased, and the degree of credit downgrading decreased. Some platforms were significantly reduced in holdings, while some provincial - level transportation platforms were increased in holdings [48]. 3.3 Overview of Financial Bond Heavy - Holding 3.3.1 Analysis of the Duration of Heavy - Holding Financial Bonds - Bank Tier 2 and perpetual bonds were mainly heavy - held by national and joint - stock banks, with a dumbbell - shaped term configuration preference. Compared with Q3, institutions' preference for state - owned banks and 3 - year terms increased significantly. The heavy - holding scale of Tier 2 and perpetual bonds increased, with state - owned banks showing obvious increases in holdings. Non - Tier 2 and perpetual bonds focused on 1 - year commercial financial bonds, and secondary - type bonds focused on 4 - year insurance bonds and 2 - 3 - year TLAC bonds [52]. 3.3.2 Analysis of the Top 20 Heavy - Holding Financial Bond Issuers - The top 20 heavy - holding bank Tier 2 and perpetual bond issuers were mainly state - owned banks, joint - stock banks, and relatively leading city commercial banks. State - owned banks generally increased their holdings, while joint - stock banks showed obvious differentiation. The yields of heavy - holding bonds generally declined rapidly, and there was significant differentiation in the remaining terms among issuers [61]. 3.4 Situation of Industrial Bond Heavy - Holding 3.4.1 Analysis of Heavy - Holding Industrial Bond Industries - Industrial bond allocation was still centered on industries with strong quasi - public attributes and industries with high financial relevance. Non - bank finance, public utilities, and transportation were the top three industries in terms of total market value of holdings. Non - bank finance and public utilities were significantly increased in holdings, while industries such as real estate, transportation, and coal were significantly reduced in holdings [71]. - Short - term duration varieties were still the main allocation. Most industries had a proportion of 0 - 2 - year terms exceeding 50%. Non - bank finance significantly lengthened the heavy - holding duration, while public utilities further increased the allocation of short - term duration bonds [72]. 3.4.2 Analysis of the Top 20 Heavy - Holding Industrial Bond Issuers - The top 20 heavy - holding industrial bond issuers were all central and local state - owned enterprises, mainly distributed in industries such as non - bank finance, public utilities, transportation, and coal. The allocation of industrial bond issuers was relatively concentrated. The average valuation yields of the top 20 heavy - holding industrial bond issuers generally declined, and there was significant differentiation in term changes among issuers [76]. 3.4.3 Analysis of the Top 10 Heavy - Holding Real - Estate Bond Issuers - State - owned and central - enterprise - affiliated real - estate bond issuers still occupied a core position. Some issuers were significantly increased in holdings, while some were significantly reduced in holdings. The real - estate bond allocation showed the characteristics of "medium - to - short - term duration + concentration on strong - credit issuers", and there was obvious differentiation in the return and duration strategies [79].

Core Viewpoint - The article discusses the issuance and approval process of bank subordinated and perpetual bonds in China, highlighting the regulatory framework and expected trends in supply and demand for these financial instruments in 2026 [1][2][3]. Group 1: Regulatory Framework - As of March 18, 2026, there are no issuance plans for bank subordinated and perpetual bonds, but significant issuance is expected in the second quarter following the approval of these bonds [1]. - The issuance of subordinated and perpetual bonds by commercial banks must adhere to a strict "dual approval" regulatory framework, requiring simultaneous approval from the People's Bank of China and the National Financial Regulatory Administration [1]. - The People's Bank of China implements annual balance management for financial bond issuance, setting limits on new balances and total balances for the year [1]. Group 2: Issuance Trends - The approval and issuance of bank subordinated and perpetual bonds show clear seasonality, with approvals concentrated in the second and fourth quarters [2]. - There is a notable difference in the speed of issuance between large state-owned banks and smaller banks, with large banks typically issuing within 20-40 days after approval, while smaller banks may take over 40 days [2]. - Large banks prefer a "timed and phased" issuance strategy, while smaller banks tend to issue bonds in a concentrated manner shortly after approval [2]. Group 3: Supply Forecast - The total supply of bank subordinated bonds is expected to remain stable with a slight increase in 2026, with a significant release anticipated in the second quarter [3]. - The net issuance of bank subordinated and perpetual bonds is projected to be around 400 billion, with additional issuance of TLAC bonds to fill the TLAC gap [3]. - The estimated issuance volumes for various types of bonds in 2026 include approximately 720 billion for 10-year subordinated bonds, 90 billion for 15-year subordinated bonds, 880 billion for perpetual bonds, and around 300 billion for TLAC bonds, totaling about 2 trillion, slightly higher than in 2024-2025 [3]. Group 4: Investment Strategy - In the context of concentrated supply in the second quarter and rising inflation expectations, the investment strategy for bank subordinated and perpetual bonds should focus on "prioritizing coupon allocation and trading from short to long" [4]. - Investors are advised to focus on medium to short-duration bonds, with an initial emphasis on 1-3 year maturities, gradually extending to around 4 years [4]. - The article suggests taking advantage of potential price adjustments due to supply shocks in the second quarter, favoring more liquid subordinated bonds and considering various maturity strategies [4].

1. Report Industry Investment Rating No information provided in the report. 2. Core Viewpoints of the Report - Bank secondary bonds may see a significant issuance volume in Q2 2026, potentially exceeding historical levels. The investment strategy should focus on "configuring for coupon income and trading from short - to long - term bonds" [1][3][40]. - The issuance of bank Tier 2 and perpetual bonds is subject to a "dual - approval" regulatory framework. The People's Bank of China focuses on "balance management", while the National Financial Regulatory Administration implements "hierarchical jurisdiction" and "quota validity period" management [3][15]. - In 2026, the supply of bank sub - debt is expected to remain stable with a slight increase. The net issuance of bank Tier 2 and perpetual bonds is estimated to be around 400 billion yuan, and the total issuance of 10 - year Tier 2 bonds, 15 - year Tier 2 bonds, perpetual bonds, and TLAC bonds is about 2 trillion yuan [3][33][34]. - The Q2 2026 issuance of bank sub - debt is predicted to be around 90 billion yuan, with a range of 700 - 1100 billion yuan, showing a significant increase compared to 2024 - 2025 [3][39][40]. 3. Summary by Directory 3.1 Commercial Banks' Regulatory Collaborative Framework for Capital Instrument Issuance: The "Dual - Approval" System of the People's Bank of China and the Financial Regulatory Administration - Commercial banks issuing Tier 2 capital bonds and perpetual bonds must obtain administrative approvals from both the People's Bank of China and the National Financial Regulatory Administration. The People's Bank of China focuses on "balance management", setting annual balance limits and the validity period usually ends at the end of the year. The Financial Regulatory Administration implements "hierarchical jurisdiction" and "quota validity period" management, with different approval authorities for different types of banks and a 24 - month approval validity period [15]. 3.2 Dynamic Laws of New Approvals, Outstanding Amounts, and Actual Issuance of Tier 2 and Perpetual Bonds - **Seasonal Characteristics of Issuance and Regulatory Approval Rhythms**: In recent years, the approval of Tier 2 and perpetual bonds has shown a phased and concentrated release, with obvious seasonality. The approval peaks are mainly in Q2 and Q4, especially for state - owned large - scale banks. Small and medium - sized banks have a more balanced approval rhythm [17]. - **Interval from "Approval" to "First Issuance": Fast for Large Banks, Slow for Small and Medium - sized Banks**: The interval from approval to first issuance shows a pattern of "fast for large banks, slow for small and medium - sized banks". State - owned large - scale banks and joint - stock banks usually have an average interval of 20 - 40 days, while city and rural commercial banks have an average interval of more than 40 days. In recent years, the issuance conversion efficiency of joint - stock banks, city commercial banks, and rural commercial banks has improved [21]. - **First - Issuance Amount after Approval: Large Banks Issue in Batches, Small and Medium - sized Banks Issue Concentratedly**: Large banks, such as state - owned large - scale banks and joint - stock banks, tend to use the approved quotas in batches according to market conditions. Small and medium - sized banks, like city and rural commercial banks, prefer to issue a large amount in the first issuance after approval. However, the overall average issuance rhythm of all types of banks is relatively fast, and most of the approved quotas are issued within one year [27][28][31]. 3.3 Deduction of the Supply Rhythm of Bank Sub - debt in 2026 - **Supply Forecast of Bank Sub - debt in 2026: Slightly Increased Net Issuance, Stable Total Issuance**: In 2026, the supply of bank sub - debt is expected to remain stable. It is estimated that the net issuance of bank Tier 2 and perpetual bonds is about 400 billion yuan, and the rest of the capital needs will be met by issuing TLAC bonds. The total issuance of 10 - year Tier 2 bonds, 15 - year Tier 2 bonds, perpetual bonds, and TLAC bonds is about 2 trillion yuan, slightly higher than that in 2024 - 2025 [33][34]. - **Will the Supply Shock of Tier 2 and Perpetual Bonds in Q2 Be Strong? The Increment May Be Significant**: As of March 2026, the total approved but unissued amount of Tier 2 and perpetual bonds in the market is about 1.62 trillion yuan. The potential supply mainly depends on the conversion rhythm of state - owned large - scale banks' approved but unissued amounts. The estimated issuance amount of bank sub - debt in Q2 2026 is about 90 billion yuan, with a range of 700 - 1100 billion yuan, showing a significant increase compared to 2024 - 2025 [37][39][40]. 3.4 Investment Strategy: Focus on Configuring for Coupon Income, Trade from Short - to Long - term Bonds - In the context of a possible concentrated release of supply in Q2, rising economic inflation expectations, and the presence of allocation power from fixed - income plus funds and wealth management products, the investment in bank Tier 2 and perpetual bonds should focus on "configuring for coupon income and trading from short - to long - term bonds". - The allocation portfolio should mainly focus on medium - and short - term durations, moderately taking risks such as rating downgrades and insufficient liquidity at curve singularities. The bottom - position should focus on 1 - 3 - year bonds and can gradually expand to about 4 - year bonds. Credit downgrades can focus on small and medium - sized banks with an implied rating of AA - or above, and pay attention to valuation repair opportunities brought by mergers and acquisitions or special bond injections. Regions such as Jiangsu and Zhejiang are preferred. - Take advantage of the price adjustment window caused by the supply shock in Q2 for allocation. Slightly focus on Tier 2 capital bonds with better liquidity, and consider trading from short - to long - term durations to play the convexity point. However, be aware of the fluctuations of these bonds during quarter - end, redemptions of fixed - income plus funds, and supply shocks, and consider fast - in - and - fast - out trading strategies or neutral hedging protection [40][41].

1. Report Industry Investment Rating - Not provided in the given content 2. Core View of the Report - The net supply of ordinary credit bonds in the primary market decreased compared to the previous period, and there were no new issuances or maturities of bank perpetual and subordinated bonds. In the secondary market, short - term yields declined while medium - and long - term yields increased, and most credit spreads widened except for the 1 - year bonds. The credit spreads in March may fluctuate weakly, but the risk of a significant widening is relatively controllable. It is recommended to moderately reduce the duration and wait for potential allocation opportunities in the short - to medium - term [4]. 3. Summary by Directory 3.1 Primary Market - **Ordinary Credit Bonds**: The issuance of ordinary credit bonds increased, but the net financing decreased. The issuance of industrial bonds increased, and the net financing also increased slightly. The issuance of urban investment bonds increased slightly, but the net financing turned negative. The weighted issuance term of ordinary credit bonds decreased to 2.87 years. The bid - cap to coupon rate of credit bonds increased from 0.45% to 0.46%, and the subscription multiple decreased from 3.22 to 3.00 [4][7][21]. - **Bank Perpetual and Subordinated Bonds**: There were no new issuances or maturities of bank perpetual and subordinated bonds this period, and there have been no issuances for 10 consecutive weeks [4][25]. 3.2 Secondary Market - **Yields**: Short - term yields declined, and medium - and long - term yields increased. For example, 1 - year medium - term notes of all ratings decreased by 1.7BP, while 10 - year AAA -/AA +/AA - grade bank perpetual bonds all increased by 6.8BP, and 10 - year AAA - grade bank secondary capital bonds increased by 7.3BP [4]. - **Credit Spreads**: Most credit spreads widened except for short - term (1 - year) medium - term notes and bank perpetual and subordinated bonds. The 1 - year bank secondary capital bonds performed the best, with the AAA - grade narrowing by 0.7BP, AA +/AA - grade narrowing by 0.9BP, and AA - grade narrowing by 1.9BP. The 10 - year bank secondary capital bonds had the largest widening amplitude [4]. - **Turnover Rate**: The turnover rates of urban investment bonds and bank perpetual and subordinated bonds increased this week, while the turnover rate of industrial bonds decreased [4][57]. 3.3 Urban Investment Bonds - **Yields**: Yields in different regions showed differentiation. For example, in Anhui, the yields of AAA - series, AA +, AA, AA(2), and AA - were 1.85%, 1.84%, 1.83%, 1.91%, and 2.12% respectively as of March 13, 2026 [69]. - **Credit Spreads**: Most credit spreads widened. For example, in Anhui, the credit spreads of AAA - series, AA +, AA, AA(2), and AA - were 22.71BP, 23.08BP, 24.10BP, 32.84BP, and 55.01BP respectively [71]. - **Turnover Rate**: The turnover rates in different regions also showed differences [72]. 3.4 Industrial Bonds - **Yields**: The yields of various industries decreased overall. For example, the yields of the agriculture, forestry, animal husbandry, and fishery industry's AAA - series, AA +, AA, and AA - were 1.89%, 1.88%, 1.99%, and 2.92% respectively as of March 13, 2026 [78]. - **Credit Spreads**: Most credit spreads widened passively. For example, the credit spreads of the agriculture, forestry, animal husbandry, and fishery industry's AAA - series, AA +, AA, and AA - were 21.80BP, 27.70BP, 41.40BP, and 135.64BP respectively [80]. - **Turnover Rate**: The turnover rates of different industries showed differences [82]. 3.5 Financial Bonds - **Yields**: Yields showed differentiation. For example, the yields of the AAA - grade bank secondary capital bonds of state - owned large - scale banks, joint - stock banks, and small and medium - sized banks were 2.03%, 2.02%, and 1.90% respectively as of March 13, 2026 [107]. - **Credit Spreads**: Most credit spreads widened. For example, the credit spreads of the AAA - grade bank secondary capital bonds of state - owned large - scale banks, joint - stock banks, and small and medium - sized banks were 33.03BP, 33.27BP, and 26.95BP respectively [107]. - **Turnover Rate**: The turnover rates of bank secondary capital bonds and bank perpetual bonds in different regions and with different ratings showed differences [94]. 3.6 Stock Bond Distribution - The current yields are mostly distributed within 2.4%. The average yields of industrial bonds in various industries and urban investment bonds in different regions are presented in detail, showing different distributions according to implicit ratings and remaining maturities [119][121].

Group 1 - The core view of the report indicates that the REITs market experienced a peak in trading volume in January 2026, followed by a significant decline due to the upcoming Spring Festival, with the weekly turnover rate dropping to 0.33%, the lowest level in the first two months of 2026 [2][6][7] - The report highlights that most REITs projects rebounded from low levels in January 2026 but faced a correction in February, with data centers and transportation sectors performing well, while other sectors like parks and consumer-related REITs saw significant declines [7][8] - The report suggests that the market will increasingly differentiate based on the quality of underlying assets, with data center REITs likely to receive valuation premiums due to AI computing demand, while park-related projects may struggle to see valuation improvements in the short term [8][9] Group 2 - The report notes a seasonal increase in wealth management products, with the total scale reaching 33.3 trillion yuan by the end of February 2026, an increase of 0.8 trillion yuan from the previous month, driven by low deposit rates and year-end bonuses [11][12] - The average annualized yield for fixed-income wealth management products fell in February 2026, with the upper limit at 2.69% and the lower limit at 2.16%, indicating a trend towards lower yields in a low-interest-rate environment [12][13] - The report anticipates that the wealth management scale could grow by approximately 3 trillion yuan in 2026, supported by favorable market conditions and seasonal factors [11][12] Group 3 - The report indicates a contraction in the supply of perpetual bonds in February 2026, with no new issues and a total repayment amount of approximately 61 billion yuan, reflecting a decrease compared to previous months [15][16] - The average credit spread for different ratings of perpetual bonds shows that AA- rated bonds have a significantly higher average credit spread compared to other ratings, indicating a higher risk pricing capability for lower-rated products [16][17] - The report recommends focusing on long-term bonds (5Y/10Y) with high credit spreads, particularly AA+ rated perpetual bonds, as they present potential investment opportunities [19]

1. Report Industry Investment Rating No information regarding the industry investment rating is provided in the given content. 2. Core Views of the Report - From March 2 - 6, due to the escalation of the Middle - East geopolitical conflict, the bond market oscillated narrowly. Credit bond yields declined across the board, with medium - to long - term bonds performing better. The yields of 5 - 10 - year AA+ and AA and 5 - year AA(2) urban investment bonds dropped by 4 - 6bp, and the spreads narrowed by 2 - 4bp, while the spreads of 1 - 3 - year bonds widened passively by 1 - 3bp [1]. - Since 2026, in a volatile bond market environment, credit bonds have shown strong performance, with yields dropping significantly. High - elasticity credit varieties such as long - term general credit bonds and long - term Tier 2 and perpetual bonds have achieved good holding returns. However, the current overall credit spreads are at relatively low levels, and the spread protection space for some long - term general credit bonds is thin [2]. - If there is no incremental positive news in the bond market, long - end interest rates may enter a state where they cannot decline further, and the volatility of high - elasticity varieties such as long - term credit and long - term Tier 2 and perpetual bonds may increase. If the capital interest rate remains stable after the Two Sessions, the leverage strategy can continue to be used to increase returns, as medium - and short - term credit bonds still have a certain carry trade space [3]. 3. Summary by Directory 3.1 Urban Investment Bonds - From March 1 - 8, the net financing of urban investment bonds was positive, with district - level platforms contributing the main increment. The issuance sentiment improved, and the issuance interest rates generally declined. In the secondary market, the yields of urban investment bonds declined across the board, with medium - to long - term varieties performing better, and the spreads showed a differentiated performance [27][31]. - In terms of broker transactions, medium - and low - grade varieties performed better, and some entities had active low - valuation transactions [35]. 3.2 Industrial Bonds - Since March, the issuance and net financing of industrial bonds have increased year - on - year. The issuance sentiment has improved, and the issuance proportion of 1 - 3 - year and over - 5 - year bonds has increased, while the issuance interest rates have increased across the board. From the perspective of broker transactions, the buying sentiment has warmed up, the proportion of medium - to long - term varieties in transactions has decreased, and the proportion of high - grade transactions has rebounded [37][39]. 3.3 Bank Tier 2 and Perpetual Bonds - From March 2 - 6, there were no new issuances of bank Tier 2 and perpetual bonds. In the secondary market, the yields of bank Tier 2 and perpetual bonds generally declined slightly, with short - term varieties having a larger decline. The spreads widened passively, and bonds with a term of 2 years and above underperformed general credit bonds, while 1 - year bonds outperformed [42]. - From the perspective of broker transactions, the trading sentiment of bank Tier 2 and perpetual bonds has significantly warmed up, and the term structure of transactions has changed in different ways for different types of banks [45].

1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints of the Report - In the context of the intensifying "asset shortage" in the credit bond market, the report aims to sort out the distribution of coupon assets of different credit varieties as of March 1, 2026, for investors' reference [3][6] 3. Summary by Relevant Catalogs 3.1 Credit Bond Market Overview - As of March 1, 2026, the total scale of traditional credit bonds (excluding convertible bonds, exchangeable bonds, and ABS) in the whole market was 480,013 billion yuan. Among them, the balance of urban investment bonds was 160,121 billion yuan, accounting for 33.4%; the balance of industrial bonds was 136,550 billion yuan, accounting for 28.4%; the balance of bank secondary perpetual bonds was 70,427 billion yuan, accounting for 14.7% [3][6] - As of March 1, 2026, the balance of high - coupon traditional credit bonds (with an exercise valuation yield of ≥2.1%) was 123,411 billion yuan, accounting for 25.7% of the total scale [3][6] 3.2 Urban Investment Bonds - As of March 1, 2026, the balance of public urban investment bonds was 87,491 billion yuan, of which the balance of high - coupon public urban investment bonds was 20,042 billion yuan, accounting for 22.9%. High - coupon public urban investment bonds were mainly distributed in regions such as Jiangsu, Shandong, Sichuan, Hubei, Jiangxi, Chongqing, Guangdong, and Shaanxi [7] - At the city level, cities such as Chengdu, Chongqing, Jinan, Beijing, Xi'an, Shenzhen, Wuhan, Tianjin, and Qingdao had a large scale of high - coupon public urban investment bonds, all exceeding 500 billion yuan. For institutions that want to extend the duration to increase returns but not too long, they can select bonds from the above regions [9][10] - At the issuer level, issuers such as Tianjin Urban Construction, Shuifa Group, and Xi'an High - tech had a high - coupon public urban investment bond balance of over 20 billion yuan. For 3 - 5Y bonds, institutions can focus on Tianjin Urban Construction, Hubei Lianfa, Qingdao Construction, Yu Aviation Port, and Kunshan Guochuang [10][11] - As of March 1, 2026, the balance of private urban investment bonds was 72,630 billion yuan, of which the balance of private urban investment bonds with an exercise valuation yield of ≥2.3% was 19,720 billion yuan, accounting for 27.2%. Regions with a large scale of private urban investment bonds with a yield of 2.3% and above included Shandong, Jiangsu, Anhui, Sichuan, and Jiangxi [12] 3.3 Industrial Bonds - As of March 1, 2026, the total balance of industrial bonds in the whole market was 136,550 billion yuan, of which the balance of public industrial bonds was 127,526 billion yuan, accounting for 93.4%. The balance of high - coupon public industrial bonds was 35,143 billion yuan, accounting for 27.6% [14] - In terms of industry distribution, industries such as public utilities, comprehensive, transportation, building decoration, and real estate had a large scale of public industrial bonds, but the proportion of high - coupon public industrial bonds in public utilities and transportation industries was relatively small, while the proportion of high - valuation bonds in the real estate industry was relatively large [14][15] - Among non - perpetual public industrial bonds, the high - valuation bonds of AA+ and above real - estate companies with a yield of >2.5% had a large scale and relatively short durations, but due to the negative impact of the industry's fundamentals, they were not recommended as allocation targets. The high - valuation bonds of AA+ and above comprehensive companies with a yield of >2.5% had a large scale, but the remaining duration of the bonds was relatively long, which may be suitable for institutions with a long - term liability duration [16] - At the issuer level, energy and coal industry issuers such as Jinneng Power, Yunnan Energy, Jinneng Coal Industry, and Jizhong Energy, as well as comprehensive issuers such as Yunnan Investment and Control and Shenye Group, had a relatively large scale of public non - perpetual high - coupon industrial bonds. Jinneng Power, Yunnan Energy, and Jinneng Coal Industry had over 10 billion yuan of 3 - 5Y public non - perpetual high - coupon industrial bonds, and their issuer ratings were mainly AAA, which could be used as key targets to increase portfolio returns [20] 3.4 Financial Bonds 3.4.1 Bank Secondary Perpetual Bonds - As of March 1, 2026, the balance of bank secondary capital bonds was 43,784 billion yuan, and the balance of bank perpetual bonds was 26,643 billion yuan. The proportion of high - coupon bank secondary capital bonds was 28.4%, and the proportion of high - coupon bank perpetual bonds was 26.0% [24] - For 3 - 5Y bank secondary capital bonds, the yield was mostly concentrated in the range of 1.9 - 2.1%, and bonds with a yield of over 2.1% mainly came from bonds with a term of over 5Y. For bank perpetual bonds, bonds with a yield of over 2.1% mainly had a remaining exercise term of 3 - 5Y [24] - For 3 - 5Y high - coupon secondary capital bonds, institutions can focus on issuers such as China Guangfa Bank, China Minsheng Bank, Shanghai Pufa Bank, Tianjin Bank, Bohai Bank, Sichuan Bank, Hengfeng Bank, and Huishang Bank, whose high - coupon secondary capital bonds all exceeded 10 billion yuan [27] 3.4.2 Other Financial Bonds - As of March 1, 2026, the balance of other financial bonds (including commercial financial bonds) except bank secondary perpetual bonds was 112,915 billion yuan, of which the balance of high - coupon financial bonds was 9,470 billion yuan, accounting for only 8.4%. The proportion of bonds with an exercise valuation yield of 1.9% and below was 81.8% [30] - The scale of financial bonds with a remaining exercise term of less than 5Y accounted for 97.7%. Although the overall scale of high - coupon financial bonds was not large, most of the remaining exercise terms were within 5Y, with certain potential for return exploration [30] - Issuers such as Ping An Life Insurance, Cinda Asset Management, Guosen Securities, and Taikang Life Insurance had over 15 billion yuan of 3 - 5Y high - coupon financial bonds, and investors can pay appropriate attention to their outstanding bonds [32]

Group 1 - The net supply of ordinary credit bonds in the primary market decreased compared to the previous period, with no new issuances or maturities for perpetual bonds [3][6][12] - The total issuance and net financing of ordinary credit bonds for the period (2026.02.23-2026.03.01) were 952 billion yuan and -892 billion yuan, respectively, compared to 1390 billion yuan and 363 billion yuan in the previous period [3][6][12] - The issuance of industrial bonds decreased to 503 billion yuan, with net financing turning negative at -294 billion yuan, while local government bonds also saw a decline in issuance to 449 billion yuan, with net financing at -598 billion yuan [3][6][12] Group 2 - In the secondary market, yields generally increased, with credit spreads showing differentiation, where high-quality bonds outperformed perpetual bonds [3][6][12] - The yield on high-quality bonds mostly increased, while some lower-rated medium-term notes saw a decline in yield, with the 1Y AA- rated notes down by 4.7 basis points and 5Y AA rated notes down by 4.6 basis points [3][6][12] - The credit spreads for high-quality bonds narrowed, while most perpetual bonds experienced widening spreads, particularly the 7Y perpetual bonds which widened by 4.7, 4.6, and 3.7 basis points for AAA, AA+, and AA- rated bonds, respectively [3][6][12] Group 3 - The strategy suggests a cautious approach towards long-duration assets, focusing on short to medium-term credit bonds with higher certainty [3][6][12] - The demand for credit bonds is expected to be supported by stable but limited downward space in deposit rates, alongside expectations of wider credit and government bond supply pressures [3][6][12] - Investment opportunities include 2-year or shorter high-quality central state-owned enterprise real estate bonds, 3-year or shorter lower-rated local government bonds, and 3-5 year high-grade insurance subordinated bonds [3][6][12] Group 4 - The trading volume of credit bond ETFs is expected to stabilize around the Spring Festival, with potential demand for credit bond ETFs approaching the end of March, although to a lesser extent than the previous year [3][6][12] - The current credit spreads are at relatively low historical levels, indicating limited room for further compression, thus highlighting the importance of selecting bonds with good value [3][6][12] - For perpetual bonds, attention should be paid to the progress of approvals from the People's Bank of China in March and the potential for resuming issuances [3][6][12]

Group 1 - The report indicates that the credit spread is currently at a low level, with limited compression potential, suggesting a focus on stability and high-yield opportunities in the market [2][24][28] - In March, the bond market is expected to experience a seasonal slow decline in yields, with credit spreads likely to widen, thus presenting opportunities for strategic allocation at high points [3][15][24] - The report highlights that the demand for credit bonds typically strengthens in the second quarter, despite the current low value for credit spreads, which may pose risks if spreads widen significantly [2][3][24] Group 2 - The strategy for credit bonds suggests that within the 3-year maturity range, there is a high demand for funds and wealth management products, with yields expected to fluctuate between 1.65% and 2.05% [3][28] - For 4-5 year maturity bonds, the report notes that the compression space is limited, and investors should consider strategic allocations at high points during the month [3][28] - Long-term bonds (over 5 years) are still seen as having some value, particularly for insurance and long-term liabilities, with a recommendation for active trading and quick exits to capitalize on market movements [3][28] Group 3 - The report emphasizes the importance of sector strategies, particularly in urban investment bonds, real estate bonds, coal bonds, and steel bonds, each with specific recommendations based on current market conditions [4][11][28] - Urban investment bonds are highlighted for their ticket value in lower-grade varieties, while real estate bonds are suggested for their potential recovery in valuation, especially for high-quality entities [4][11] - The coal and steel sectors are advised for short-term investments, with specific focus on high-grade bonds and the potential for yield improvements based on market conditions [4][11]

1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints of the Report - Since the beginning of the year, long - term and ultra - long - term credit bonds have performed well. The participation of trading desks, along with the entry of allocation desks and the concentrated opening of amortizing debt funds, has been a key factor in the rapid narrowing of credit spreads [1][14]. - In March, the credit bond market is likely to maintain a volatile pattern due to factors such as the intertwined bull - bear factors in the bond market, insufficient spread protection, and the "strong supply and weak demand" pressure [22]. - It is recommended to control duration, use leverage strategies to increase returns, and buy high - grade long - term bonds on dips. There are also opportunities for short - term credit bond carry trades [23]. 3. Summary of Each Section 2.1 2 - month Credit Bond Market Review and March Outlook 2.1.1 2 - month Credit Spread Review - In February 2026, the credit bond market bid farewell to the comprehensive spread compression in January, showing an "N" - shaped spread trend. The spreads of 10 - year ultra - long credit bonds narrowed significantly, outperforming other tenors [10]. - In the first week (2.2 - 2.6), credit spreads generally widened passively; in the second week (2.9 - 2.13), spreads narrowed overall with long - term bonds having an edge; in the post - holiday week (2.24 - 2.27), spreads showed a differentiated performance [10]. 2.1.2 Observation of Institutional Behavior Since the Beginning of the Year - Other asset management institutions are the largest buyers of 7 - 10Y credit bonds, followed by insurance and funds. Insurance's net buying of 7 - 10Y credit bonds is significantly stronger than last year, related to the "开门红" of dividend - paying insurance [14][17]. - Funds turned to net buying of 7 - 10Y credit bonds in February, possibly due to limited downward compression space for spreads within 5Y and the high cost - performance of ultra - long credit bonds [14]. - Since the beginning of the year, public funds have strongly bought credit bonds within 5Y, far exceeding the seasonal level. 3 - 5Y credit bonds are the main allocation targets, and the concentrated opening of amortizing fixed - term debt funds has brought incremental demand [19]. 2.1.3 March Credit Bond Market Outlook - In March, the credit bond market is likely to be volatile. The market is affected by factors like the calendar effect, insufficient spread protection, and the "strong supply and weak demand" situation [22]. - Strategies include controlling duration, using leverage to enhance returns, and buying high - grade long - term bonds on dips. There are carry trade opportunities for short - term credit bonds [23]. 2.2 Credit Bond Yield Overview - In February, credit bond yields mainly declined, with medium - and long - term credit bonds performing better. Among general credit bonds, most bond types declined, with some medium - and long - term bonds performing best [28]. - Financial bond yields also declined, with medium - and long - term bonds performing better. 5 - year brokerage subordinated bonds and some 10 - year bonds had the largest yield declines [28]. - As of the end of February, the overall wealth management scale increased, the one - year average annualized return slightly declined, and the net - breaking rates of all bank wealth management and wealth management subsidiaries decreased [30]. 2.3 Primary Market 2.3.1 Issuance Volume - In February, the credit bond issuance volume and net financing volume decreased both year - on - year and month - on - month. The net financing volumes of urban investment bonds, industrial bonds, and financial bonds all declined compared to the same period last year [35]. 2.3.2 Issuance Term - The average issuance term of credit bonds slightly decreased. The average issuance term of urban investment bonds remained flat, industrial bonds decreased, and financial bonds increased [43]. 2.3.3 Issuance Cost - The average issuance cost of credit bonds decreased. The average issuance rates of industrial and urban investment bonds decreased, while that of financial bonds increased slightly [46]. 2.3.4 Cancellation of Issuance - The number and scale of credit bond issuance cancellations decreased in February compared to the previous month [51]. 2.4 Secondary Market 2.4.1 Trading Volume - Affected by holidays, the trading volumes of all types of credit bonds decreased in February. The trading terms of urban investment and industrial bonds extended, and the trading of different ratings also changed [55]. 2.4.2 Trading Liquidity - The turnover rates of urban investment bonds, industrial bonds, and financial bonds decreased in February. The turnover rates of short - term urban investment and industrial bonds and long - term financial bonds decreased significantly [58]. 2.4.3 Spread Tracking - In February, the spreads of urban investment bonds showed different trends. The spreads of medium - and low - grade bonds within 5Y and all ratings of 10Y bonds narrowed, with the 10Y AAA - rated urban investment bonds having the largest narrowing [64]. - Most provincial spreads narrowed. Among AAA - rated and AA - rated industrial bonds, most industry spreads narrowed, with the banking industry having the largest narrowing [67]. - The spreads of bank secondary and perpetual bonds mostly narrowed, mainly in 1Y, 5Y, and 10Y. Insurance subordinated bond spreads mostly narrowed, while brokerage subordinated bond spreads mostly widened [70][72]. 2.5 February's Hottest Bonds - Based on qeubee's bond liquidity scores, the top 20 most liquid urban investment bonds, industrial bonds, and financial bonds are selected for investors' reference [74]. 2.6 Credit Rating Adjustment Review - In February 2026, 3 bonds had their debt ratings upgraded, and there were no downgrades [80].