1. Report Industry Investment Rating No relevant information provided. 2. Core Viewpoints of the Report - The mid - long - end of Tier 2 capital bonds and perpetual bonds of banks has recovered, and the curve of ordinary and perpetual bonds continues to steepen. The 2 - 3 - year ordinary and perpetual bonds are more favored by institutions. Considering the unclear geopolitical conflict pattern and inflation concerns, the 3Y - 2Y interval can be used as a key allocation area in the future [2][3][17]. - The trading volume of mid - long - term Tier 2 capital bonds and perpetual bonds has decreased, while the trading volume of urban investment bonds has increased significantly, driving the overall increase in the trading volume of ordinary and perpetual bonds [18][21]. - In primary issuance, the issuance of industrial bonds has increased, while the issuance of Tier 2 capital bonds and perpetual bonds remains at a low level. The issuance of science and innovation bonds has decreased compared with the previous period but still shows a significant year - on - year increase [26][29][30]. 3. Summary According to the Directory 3.1 Secondary Market: Divergent Trends of Tier 2 Capital Bonds and Perpetual Bonds, and an Increase in the Trading Volume of Urban Investment Bonds 3.1.1 Market Trends - **Tier 2 Capital Bonds**: The yields of all maturities have generally declined, with the mid - long - end declining more than the short - end. The spreads have been comprehensively compressed, and the curve shows a co - existence of local steepening in the middle and flattening at the long - end [9]. - **Perpetual Bonds**: The yield and spread trends are similar to those of Tier 2 capital bonds. The 2 - 3 - year maturity has relatively high cost - effectiveness, while the long - term bonds are more volatile [10]. - **Ordinary and Perpetual Bonds**: The curve steepening is further strengthened. The yields of 1 - 5 - year maturities generally decline, and the long - end steepening is more significant [13][14]. - **Urban Investment Bonds**: The yields of all maturities generally decline, and the curve steepening trend continues. The 2 - 3 - year maturity has a relatively large decline in yield [16]. 3.1.2 Trading Volume - **Tier 2 Capital Bonds and Perpetual Bonds**: The trading volume of mid - long - term bonds has decreased. The total trading volume of Tier 2 capital bonds has decreased by about 279 billion yuan, and that of perpetual bonds has decreased by about 252 billion yuan [18]. - **Ordinary and Perpetual Bonds**: The total trading volume has increased significantly, with an increase of more than 260 billion yuan. The trading volume of industrial bonds, urban investment bonds, and quasi - urban investment bonds has all increased to varying degrees [21]. - **High - Yield Urban Investment Bonds**: The high - yield trading last week was mainly concentrated in Shandong, Beijing, Sichuan, Fujian, Guizhou, Jiangxi and other places [25]. 3.2 Primary Issuance: Increased Issuance of Industrial Bonds, and Low - level Issuance of Tier 2 Capital Bonds and Perpetual Bonds - **Ordinary and Perpetual Bonds**: The total issuance last week was about 397 billion yuan, with a net financing of about 117 billion yuan. The issuance of industrial bonds has increased significantly, and the issuance of urban investment bonds has increased slightly [26]. - **Financial Bonds**: The total issuance last week was about 50.2 billion yuan, with a net financing of about 2.4 billion yuan. The issuance of securities company bonds is still the main force, and the issuance of Tier 2 capital bonds, commercial financial bonds, and TLAC non - capital bonds remains at a low level [29]. - **Science and Innovation Bonds**: The issuance last week was about 58.4 billion yuan, with a net financing of about 42.1 billion yuan. Although the issuance and net financing scale have declined compared with the previous period, they still show a significant year - on - year increase [30].

Group 1: Market Overview - Credit bond yields mostly declined, with short to medium-term bonds performing relatively well amid market volatility and cautious sentiment[1] - The geopolitical situation and inflation expectations continue to impact market dynamics, leading to a mixed performance in credit spreads[1] Group 2: "Fixed Income +" Fund Redemption Impact - The scale of "Fixed Income +" funds grew rapidly, increasing from CNY 693.5 billion at the end of 2024 to CNY 1.581 trillion by the end of 2025[2] - The bond allocation in mixed secondary bond funds reached 82.08%, with 37% in financial bonds, 35% in public bonds, and 15% in government financial bonds[2] Group 3: Redemption Effects and Future Outlook - Recent net redemptions from "Fixed Income +" funds have intensified, but the credit bond market remains stable with minimal impact from these redemptions[2] - Seasonal demand for asset management products in Q2 may mitigate the negative effects of redemptions, with April and July typically seeing increased credit bond allocations[2] Group 4: Investment Strategy - For bonds with maturities of 3 years or less, the expected yield range is 1.61%-1.94%, with credit spreads between 14-35 basis points[3] - Bonds in the 4-5 year range, particularly those rated AAA and AA+, show yields around 1.88%-2.02% and credit spreads of 22-32 basis points, indicating potential investment opportunities[3]

Report Summary 1. Investment Rating of the Industry The report does not mention the investment rating of the industry. 2. Core Viewpoints - The core contradiction has switched, and the balance of asset allocation continues. Bonds have entered a "sell on every rally" time window, and the interest rate curve is steepening [39][43]. - Pay attention to the potential impact of supply - demand pattern changes on the credit bond market. In the second quarter, focus on the potential incremental demand for credit bonds [3][45]. - Currently, the valuation of credit bonds may not be highly cost - effective, but the potential adjustment pressure is relatively controllable. Credit bonds will follow the adjustment rather than over - adjust [4][162]. - The credit strategy is to shift from reducing duration to controlling duration and from a defensive to an offensive stance [4][193]. 3. Summary by Directory 2026 Market Review - **Primary Market**: In 2026Q1 (as of March 15), the issuance and net supply of traditional credit bonds decreased quarter - on - quarter. Bank secondary perpetual bonds had no new issuance, and net financing turned negative. For traditional credit bonds, the issuance and net financing were 2428.1 billion yuan and 773.5 billion yuan respectively, with a slight decrease in net supply. For bank secondary perpetual bonds, there was no new issuance, 4.76 billion yuan of maturities, and negative net financing [8][15][31]. - **Secondary Market**: In Q1, credit bond yields declined across the board, and credit spreads mostly narrowed. In January, credit bonds strengthened; in February, the market oscillated; since March, the bond market has weakened, but credit bonds have shown resilience. Yields of various maturities decreased, and credit spreads mostly narrowed, with short - term secondary perpetual bonds having the largest narrowing amplitude [18][19][31]. 2026 March - May Market Outlook - **Bond Market Transition**: The core contradiction in the bond market has switched. Bonds have entered a "sell on every rally" time window, and the interest rate curve is steepening. The 10 - year Treasury yield may range from 1.77% to 1.95%, with a possibility of breaking above 1.9%. It is recommended to be cautious about long - term and ultra - long - term assets [39][43]. - **Supply - Demand Pattern**: - **Supply**: For general credit bonds, urban investment bonds have net inflows, and industrial bond supply remains strong. For financial bonds, there has been no new issuance of secondary perpetual bonds this year, and the supply of ordinary securities firm bonds has increased, but these extreme structural features are not sustainable [67][76][224]. - **Demand**: - **Wealth Management**: The scale was stable in Q1, with seasonal balance - sheet return pressure in March. The scale is expected to grow seasonally in Q2, and the demand is mainly for medium - and short - term bonds [82]. - **Funds**: The scale and structure of amortized cost bond funds are changing. Pay attention to the potential increment of "fixed - income +" funds, and credit bond ETFs may still have an impulse to increase volume at the end of the quarter [86][101][129]. - **Insurance**: The proportion of dividend - paying insurance in the insurance liability side has increased, and the demand for long - term bonds has decreased. The direct investment in credit bonds is strong, but the buying power has weakened marginally [138][141]. - **Other Potential Changes**: The credit spreads of ultra - long - term credit bonds with maturities over 5 years have declined, but the trading desks are still cautious. The optimization of inter - bank rules promotes the launch of science and technology innovation bond indices and index products, and there are potential opportunities in inter - bank science and technology innovation bonds [144][148][159]. - **Valuation and Adjustment Pressure**: Currently, the valuation of credit bonds may not be highly cost - effective, but the potential adjustment pressure is relatively controllable. Historically, when long - term interest rates rise and the 10 - 1Y term spread widens, credit spreads do not necessarily widen. In March, spreads may oscillate weakly, and there may be market opportunities from April to May [162][178][185]. - **Credit Strategy**: - **General Strategy**: In March, gradually switch from medium - term (3 - 5 years) to medium - and short - term (around 3 years) bonds, and from high - elasticity, low - safety - cushion varieties to low - elasticity, certain - safety - cushion varieties. Actively seize potential credit market opportunities from April to May while keeping the duration in check [193]. - **Urban Investment Bonds**: For bonds with a maturity of less than 3 years, increase returns through credit enhancement; for bonds with a maturity of more than 3 years, increase positions on dips [197][201][203]. - **Industrial Bonds**: Control the duration and focus on carry trades [207][212][213]. - **Bank Secondary Perpetual Bonds**: Generally, be cautious and wait and see. Pay attention to the participation opportunities of medium - and short - term secondary perpetual bonds of small and medium - sized banks [220][223].

1. Report Industry Investment Rating - Not provided in the report 2. Core View of the Report - Amid the "asset shortage" of credit bonds, with interest rates continuously fluctuating at low levels and increasing difficulty in capital gain speculation, it is recommended to focus on the stable income value of high - coupon assets[4][43] 3. Summary by Directory 3.1 This Week's Credit Hot Events - Some member banks participated in the market interest rate pricing self - regulatory mechanism meeting and were required to strengthen self - management. The proportion of inter - bank current deposits with an interest rate higher than the 7 - day reverse repurchase OMO policy rate (1.4%) at the end of the quarter should not exceed 10% - 20%. It is expected that the interest rate of over 10 trillion inter - bank deposits may be lowered, which is directly beneficial to short - term bonds. As of March 13, 2026, the 3M/6M inter - bank certificate of deposit rates were 1.50%/1.525%, approaching the lowest point since 2020, driving down the short - term credit bond yields this week[9] 3.2 Primary Market - The net financing of credit bonds (excluding asset - backed securities) this week was 11.91 billion yuan, an increase of 6.9 billion yuan compared with last week. The total issuance volume was 41.95 billion yuan, an increase of 15.18 billion yuan, and the total repayment volume was 30.04 billion yuan, an increase of 8.28 billion yuan. The net financing of asset - backed securities was - 0.44 billion yuan, a decrease of 0.06 billion yuan compared with last week. By product type, the net financing of urban investment bonds was 1.85 billion yuan, an increase of 0.75 billion yuan; that of industrial bonds was 7.86 billion yuan, an increase of 3.88 billion yuan; and that of financial bonds was 2.20 billion yuan, an increase of 2.27 billion yuan. In terms of issuance and redemption quantity, the issuance and redemption quantities of urban investment bonds, industrial bonds, and financial bonds all increased compared with last week[13][15] 3.3 Secondary Market 3.3.1 Transaction Situation - The trading volume of credit bonds (excluding asset - backed securities) decreased by 1.82 billion yuan compared with last week. Among them, the trading volume of urban investment bonds decreased by 2.61 billion yuan, that of industrial bonds decreased by 1.51 billion yuan, that of financial bonds increased by 2.30 billion yuan, and that of asset - backed securities decreased by 0.54 billion yuan. In terms of turnover rate, the turnover rates of different types of credit bonds increased or decreased compared with last week. The turnover rate of urban investment bonds was 1.47%, a decrease of 0.17 pct; that of industrial bonds was 1.76%, a decrease of 0.08 pct; that of financial bonds was 3.16%, an increase of 0.14 pct; and that of asset - backed securities was 0.3%, a decrease of 0.13 pct[18] 3.3.2 Yield - The yield fluctuations of credit bonds with different ratings and maturities this week did not exceed 3BP compared with last week. Specifically, the yields of 1Y AA, AAA -, and AAA + credit bonds decreased by 2BP, 3BP, and 1BP respectively; the yields of 5Y AA, AAA -, and AAA + credit bonds increased by 1BP, 1BP, and 2BP respectively; and the yields of 10Y AA, AAA -, and AAA + credit bonds increased by <1BP, <1BP, and 2BP respectively. Taking AA + - rated 5Y bonds of each type as an example, the yields of different types of bonds all increased to varying degrees this week[22][24] 3.3.3 Credit Spreads - Overall, the credit spreads of AA + communication and non - bank financial industries widened significantly compared with last week, and the credit spread of AA + machinery and equipment industry widened slightly. The fluctuations of credit spreads of other industries and ratings did not exceed 10BP. Specifically, the credit spreads of AA + communication and non - bank financial industries widened by 29BP and 13BP respectively, the credit spread of AA + machinery and equipment industry widened by 6BP, and the credit spread of AA + pharmaceutical and biological industry compressed by 6BP. The fluctuations of credit spreads of other industries and ratings did not exceed 5BP[28] - **Urban Investment Bonds**: The credit spreads of urban investment bonds with different maturities fluctuated slightly within 3BP this week. By region, except for a slight compression of credit spreads in a few regions, the credit spreads of most regions widened by no more than 5BP[30][33] - **Industrial Bonds**: Except for the slight widening of the spreads of 1Y AAA, AA, and 3Y AAA renewable industrial bonds, the credit spreads of industrial bonds with other maturities compressed to varying degrees compared with last week[35] - **Bank Capital Bonds**: The credit spreads of bank Tier 2 and perpetual bonds within 3Y mostly compressed slightly compared with last week, while the long - term credit spreads of 5Y and above mostly widened slightly[37] 3.4 This Week's Bond Market Public Opinions - The implied ratings of 27 bond issues issued by Guangzhou Urban Construction and Development Co., Ltd. were downgraded; the implied ratings of 4 bond issues issued by Shenzhen Qianhai Lianyirong Commercial Factoring Co., Ltd. were downgraded; and the entity rating of Zhongnengtiehan Ecological Environment Co., Ltd. was downgraded[39] 3.5 Investment Recommendations - This week, the central bank had a net withdrawal of 25.11 billion yuan. Overall, the credit spreads of AA + communication and non - bank financial industries widened significantly, and the credit spread of AA + machinery and equipment industry widened slightly. The credit spreads of other industries and ratings fluctuated within 10BP. The credit spreads of urban investment bonds with different maturities fluctuated slightly within 3BP. Except for the slight widening of the spreads of 1Y AAA, AA, and 3Y AAA renewable industrial bonds, the credit spreads of industrial bonds with other maturities compressed. The credit spreads of bank Tier 2 and perpetual bonds within 3Y mostly compressed slightly, while the long - term credit spreads of 5Y and above mostly widened slightly. It is recommended to focus on the stable income value of high - coupon assets[42][43]

1. Report Industry Investment Rating - Not provided in the report 2. Core Viewpoints of the Report - Amid the "asset shortage" of credit bonds, with interest rates continuously fluctuating at low levels and increasing difficulty in capital gain speculation, it is advisable to focus on the stable income value of high - coupon assets [4][48] - The optimization of the science and innovation bond mechanism by the Dealer Association marks the transition of inter - bank market science and innovation bonds from pilot exploration to mature development, facilitating the precise flow of market funds into hard - tech sectors and promoting the in - depth integration of technology, capital, and industry [13] 3. Summary by Relevant Catalog 3.1 This Week's Credit Hot Events - On March 2, 2026, the National Association of Financial Market Institutional Investors issued the "Notice on Further Optimizing the Mechanism of Science and Technology Innovation Bonds", which expands the scope of supported science and technology innovation - related titles, clarifies the standards for issuing science and technology innovation bonds based on the number of patents, manages the use of raised funds by science - and - technology enterprises in a hierarchical and classified manner, guides enterprises to issue medium - and long - term science and technology innovation bonds, enhances the convenience for equity investment institutions to issue such bonds, controls the risk of local government implicit debt, supports the development of "hard - tech" enterprises, encourages the improvement of the rating method system for the science and technology innovation industry, explores the introduction of information disclosure and liability agreement clauses based on agreements, and promotes the improvement of the investment - end mechanism [9][10][11] 3.2 Primary Market - This week, the net financing of traditional credit bonds (excluding asset - backed securities) was 124.3 billion yuan, a 165.8 billion - yuan increase from last week. The net financing of asset - backed securities was - 3.7 billion yuan, a 46.9 billion - yuan increase from last week [14] - By product type, the net financing of urban investment bonds was 54.7 billion yuan, an increase of 78 billion yuan; that of industrial bonds was 63.8 billion yuan, an increase of 63.9 billion yuan; and that of financial bonds was 5.9 billion yuan, an increase of 23.9 billion yuan [14] - In terms of issuance and redemption quantity, the issuance quantity of urban investment bonds increased by 117, and the redemption quantity increased by 9; the issuance quantity of industrial bonds increased by 99, and the redemption quantity increased by 17; the issuance quantity of financial bonds increased by 14, and the redemption quantity increased by 1 [17] 3.3 Secondary Market 3.3.1 Transaction Situation - The trading volume of credit bonds (excluding asset - backed securities) increased by 511.6 billion yuan compared with last week. Among them, the trading volume of urban investment bonds was 256.8 billion yuan, an increase of 116 billion yuan; that of industrial bonds was 364.9 billion yuan, an increase of 175.2 billion yuan; and that of financial bonds was 474.9 billion yuan, an increase of 220.4 billion yuan. The trading volume of asset - backed securities was 16.2 billion yuan, an increase of 8.7 billion yuan [19] - The turnover rate of credit bonds increased overall compared with last week. The turnover rate of urban investment bonds was 1.64%, a 0.74 - percentage - point increase; that of industrial bonds was 1.84%, a 0.88 - percentage - point increase; that of financial bonds was 3.03%, a 1.41 - percentage - point increase; and that of asset - backed securities was 0.43%, a 0.23 - percentage - point increase [19] 3.3.2 Yield - The yields of credit bonds with different ratings and maturities decreased to varying degrees compared with last week, with the 10 - year yield showing a larger decline. For example, the 1 - year AA, AAA -, and AAA + credit bond yields decreased by 3BP each; the 5 - year AA, AAA -, and AAA + credit bond yields decreased by 4BP, 3BP, and 3BP respectively; and the 10 - year AA, AAA -, and AAA + credit bond yields decreased by 6BP, 6BP, and 5BP respectively [24] - Taking the 5 - year AA + of each product type as an example, the yields of different products decreased to varying degrees. The yields of privately - issued industrial bonds and perpetual industrial bonds decreased by 3BP each; the yield of 5 - year AA + urban investment bonds decreased by 4BP; the yields of commercial bank ordinary bonds and secondary capital bonds decreased by 2BP and 1BP respectively; and the yield of 5 - year AA + asset - backed securities decreased by 3BP [26] 3.3.3 Credit Spreads - Overall, the credit spreads of the AA + electronics and textile and apparel industries widened significantly compared with last week, while the credit spreads of other industries and ratings fluctuated within 5BP. Specifically, the credit spreads of the AA + electronics and textile and apparel industries widened by 20BP and 13BP respectively [31] - For urban investment bonds, the short - term credit spreads within 3 years widened slightly, while the medium - and long - term credit spreads over 3 years compressed slightly. Regionally, most regions' urban investment spreads widened by no more than 6BP, with a few regions showing slight compression [35][37] - For industrial bonds, the long - term credit spreads compressed significantly, while the credit spreads of other maturities fluctuated within 3BP compared with last week [41] - For bank capital bonds, the credit spreads of bank Tier 2 and perpetual bonds with different maturities fluctuated within 3BP compared with last week [44] 3.4 This Week's Bond Market Public Opinions - The implied ratings of "Xiaojingkaiyou" issued by Hangzhou Xiaoshan Economic and Technological Development Zone State - owned Assets Management Co., Ltd. and "25 Jingkaiyou" issued by Zhejiang Hangzhou Bay Information Port High - tech Construction and Development Co., Ltd. were downgraded [45] 3.5 Investment Suggestions - In the context of the "asset shortage" of credit bonds, it is recommended to focus on the stable income value of high - coupon assets. For urban investment bonds, pay attention to entities such as Tianjin Urban Construction, Hubei Lianfa, etc. For industrial bonds, consider entities like Jinneng Electric Power and Yunnan Energy. For bank secondary capital bonds, focus on banks such as China Guangfa Bank and China Minsheng Bank. For other financial bonds, pay attention to entities such as Ping An Life Insurance and Cinda Asset Management [48]

1. Report Industry Investment Rating - No information provided in the content 2. Core View of the Report - In January 2026, the bond market showed a relatively strong and volatile trend. Driven by factors such as the coupon advantage of credit bonds over interest - rate bonds, increased credit - bond allocation demand from banks and insurance companies during the "good start" period, and the investment preference shift of amortized bond funds during their concentrated opening periods, credit bonds outperformed interest - rate bonds, and credit spreads narrowed across the board. Currently, the spreads of short - duration credit bonds have generally been compressed to historical lows, while some medium - and long - duration varieties still have certain spread spaces. Considering the allocation demand of amortized bond funds for medium - and high - grade credit bonds, it is advisable to moderately extend the duration and use carry trade and leverage on 3 - 5 - year medium - and high - grade credit bonds to enhance returns [2]. 3. Summary According to the Directory 3.1 Various Credit Bond Spread Performances - In January 2026, the bond market was volatile. At the beginning to the middle of the month, the strong performance of the stock and commodity markets suppressed the bond market. In the second half of the month, due to factors such as profit - taking, an increase in margin requirements for financing, the mild implementation of the new public - fund fee regulations, interest - rate cuts by the central bank's structural monetary policy tools, and strong buying by institutional investors, the bond market recovered. Credit bonds outperformed interest - rate bonds, and credit spreads narrowed across the board [3]. - By the end of January, the spreads of most credit - bond varieties narrowed compared to the end of the previous month. Only the spreads of 3 - year AAA - grade non - public industrial bonds, 5 - year medium - and high - grade non - public urban investment bonds, and 5 - year AA + and AA - grade securities company subordinated bonds widened slightly. The spreads of Tier 2 capital bonds and short - and medium - duration low - grade non - financial credit bonds compressed significantly [3]. - In terms of historical quantiles, at the end of January, the historical quantiles of short - duration credit spreads were generally around 5%. The historical quantiles of 3 - year non - public industrial bonds, perpetual industrial bonds, non - public urban investment bonds, bank Tier 2 capital bonds, and insurance company capital - supplementary bonds were around 20%. The historical quantiles of 5 - year AA - grade varieties, medium - and high - grade non - public urban investment bonds, and financial bonds were relatively high, around 25% [3]. - At the end of January, the grade spreads of most credit bonds of various tenors narrowed. Only the grade spreads of short - duration financial bonds and some tenors of industrial bonds widened slightly. The 5 - year (AA +) - AAA and AA - AAA grade spreads were relatively high, mostly above the 40% historical quantile. The 1 - year and 3 - year non - public industrial bonds and the (AA +) - AAA grade spreads of bank perpetual bonds were at relatively high historical quantiles, all above 50%, with the 1 - year bank perpetual bond (AA +) - AAA grade spread reaching 87.9% [6]. - Supported by the "good start" of banks and insurance companies and the allocation demand for medium - and long - duration credit bonds from amortized - cost bond funds during their concentrated opening periods, the term spreads of credit bonds of all grades generally narrowed at the end of January compared to the end of the previous month. However, attention should be paid to the relatively large widening of the 5Y - 1Y spread of medium - and high - grade non - public urban investment bonds. In terms of historical quantiles, at the end of January, the term spreads of non - public urban investment bonds rated AA and above and the 3Y - 1Y spread of non - public industrial bonds were relatively high, all above 55%. The term spreads of public industrial bonds, public, and perpetual urban investment bonds were around the 40% historical quantile. The term spreads of financial bonds were relatively high, with the term spreads of bank Tier 2 and perpetual bonds of all grades generally around the 50% historical quantile, the term spreads of insurance company capital - supplementary bonds of all grades above 60%, and the 5Y - 1Y spread of AAA - grade securities company subordinated bonds reaching 89% [8]. 3.2 Industrial Bond Spreads 3.2.1 Industry - wide Spreads - In January, the credit spreads of AAA - grade industrial bonds generally narrowed. Only the spreads of public and private bonds in the real - estate industry and private bonds in the steel industry widened. Among public bonds, at the end of January, the spreads of the social - service, real - estate, and power - equipment industries were above 50bps. Compared with the end of December, only the spread of the real - estate industry widened by 6.24bps, while the spreads of other industries narrowed, with the social - service industry having the largest narrowing amplitude of 7.20bps. Among private bonds, at the end of January, the spreads of the real - estate, financial - holding, building - materials, and steel industries were above 70bps. Only the spreads of the real - estate and steel industries widened by 3.06bps and 0.89bps respectively compared to the end of the previous month. The spreads of the food - and - beverage and coal industries both narrowed by more than 9bps compared to the end of the previous month [11]. 3.2.2 Key Industry Observations - At the end of January, the credit spreads of 3 - year medium - and high - grade public bonds in key industries (steel, coal, power, and construction engineering) generally narrowed compared to the end of the previous month. Only the AA + - grade spread in the steel industry widened slightly by 0.2bps. Among major bond - issuing enterprises, in the steel industry, the spreads of most enterprises narrowed, with only the spread of China Baowu widening by 5.86bps. In the coal industry, the spreads of key enterprises generally narrowed, with the spread of State Energy Investment remaining basically the same as at the end of the previous month, and the spreads of Jincheng State - owned Investment and Shaanxi Coal and Chemical Industry narrowing by 9bps and 8bps respectively. Affected by the bond extension event of Vanke, the spreads of outstanding bonds of most entities in the real - estate industry widened, with only Beijing Urban Construction, CCCC Group, Nanjing Anju Construction, and Shenzhen Metro narrowing slightly, with the narrowing amplitude within 5bps [14]. 3.3 Urban Investment Bond Spreads - In January, the yields of urban investment bonds of major ratings and tenors declined across the board, and the credit spreads of medium - and long - duration low - grade urban investment bonds declined more significantly. Specifically, at the end of January, the credit spreads of 3 - year AAA, AA +, AA, and AA - grade urban investment bonds were 16.21bps, 20.21bps, 26.61bps, and 59.61bps respectively, narrowing by 1.94bps, 3.94bps, 5.94bps, and 11.94bps respectively compared to the end of the previous month. The spreads of 5 - year AAA, AA +, AA, and AA - grade urban investment bonds narrowed by 2.30bps, 5.80bps, 9.30bp, and 7.30bps respectively compared to the end of the previous month [30]. - Regionally, in January, the credit spreads of public and private urban investment bonds in all provinces narrowed across the board. Among public bonds, at the end of January, the spreads of Inner Mongolia and Guizhou exceeded 100bps, and the spreads of Qinghai, Inner Mongolia, Guangxi, Tianjin, Ningxia, and Yunnan narrowed by more than 10bps compared to the end of the previous month. Among private bonds, at the end of January, the spreads of Guizhou, Heilongjiang, Inner Mongolia, Qinghai, Yunnan, and Guangxi exceeded 120bps, and the spreads of Heilongjiang, Liaoning, Shaanxi, and Tianjin narrowed by more than 11bps [33][34]. 3.4 Financial Bond Spreads 3.4.1 Bank Tier 2 and Perpetual Bonds - In January, the credit spreads of bank Tier 2 and perpetual bonds narrowed across the board. At the end of January, the credit spreads of 3 - year AAA -, AA +, AA, and AA - grade bank Tier 2 capital bonds narrowed by 5.30bps, 7.32bps, 8.32bps, and 6.32bps respectively compared to the end of the previous month; the spreads of 3 - year AAA -, AA +, AA, and AA - grade bank perpetual bonds narrowed by 9.36bps, 9.36bps, 9.36bps, and 9.326bps respectively. The yield curve flattened and declined, and the term spreads narrowed across the board. The 3Y - 1Y and 5Y - 1Y spreads of AAA - grade bank Tier 2 capital bonds narrowed by 1.37bps and 4.62bps respectively; the 3Y - 1Y and 5Y - 1Y spreads of AAA - grade bank perpetual bonds narrowed by 5.11bps and 0.9bps respectively. The grade spreads of bank Tier 2 capital bonds narrowed across the board, while the grade spreads of bank perpetual bonds remained the same as the previous month [36]. 3.4.2 Securities Subordinated Bonds/Insurance Company Capital - Supplementary Bonds - At the end of January, the credit spreads of securities company subordinated bonds and insurance company capital - supplementary bonds both narrowed compared to the end of the previous month. Specifically, at the end of January, the credit spreads of 3 - year AA + and AA - grade securities company subordinated bonds declined by 13.66bps and 10.66bps respectively to 25.99bps and 35.99bps; the credit spreads of 3 - year AA + and AA - grade insurance company capital - supplementary bonds declined by 5.73bps and 5.73bps respectively to 29.60bps and 35.60bps [45].

Key Points - The report indicates that there is still potential for credit spread compression, particularly in the context of different bond types and their excess spreads compared to similar maturity and rating bonds [1][3][35] - As of January 30, 2026, the excess spreads for 3Y AAA-rated bank subordinated bonds, perpetual bonds, and industrial bonds are 6.1BP, 6.6BP, and 11.0BP, respectively, which are at the 92%, 79%, and 44% percentiles since early 2025 [1][3][35] - The report suggests that the selection of bonds based on value for money ranks as follows: bank subordinated bonds > perpetual bonds > urban investment bonds > industrial bonds [1][35] Credit Strategy Review for January 2026 - The yield of bank subordinated bonds has significantly decreased, and the excess spreads remain high, indicating potential for further compression [3][6] - The report notes that the 3Y AA+ urban investment bond yield decreased by 9BP, with the yield at the end of January 2026 being 1.91% [11] - Factors contributing to the decline in credit bond yields include limited corporate financing demand, stable credit issuance, and a loose funding environment [11][14] Performance of Different Credit Strategies - In January 2026, the performance of various credit strategies ranked as follows: duration extension > barbell strategy > 3Y bullet strategy > short-end sinking [15] - The returns for the duration extension strategy for urban investment bonds, industrial bonds, bank subordinated bonds, and perpetual bonds were 0.65%, 0.85%, 0.76%, and 0.82%, respectively [15][18] - The report highlights that the short-end sinking strategy yielded returns of 0.16%-0.19% across different bond types, although its performance was generally average [17][18] Outlook for February 2026 - The report anticipates that the overall funding environment will remain tight, with a weak recovery in the fundamentals [35] - It is expected that the central bank's operations will lead to a decrease in funding rates, potentially resulting in a further decline in long-term bond yields by 5-10BP in Q1 2026 [35] - The report emphasizes that the credit spread compression trend is likely to continue, with a focus on the performance of various bond types [35]

Group 1 - The report highlights that the recent opening of amortized cost bond funds has led to a significant increase in credit bond allocations, with a total opening scale reaching 33 billion yuan, including 8.1 billion yuan for 2-year and 24.9 billion yuan for 5-year funds [1][9] - In the past two weeks, funds have significantly increased their allocation to credit bonds, with net purchases of 62.2 billion yuan from January 12 to January 16 and 105.9 billion yuan from January 19 to January 23, indicating a strong demand for 3-5 year credit bonds [1][9] - The report notes that the 3-5 year short-term bonds have shown outstanding performance, with yields declining by 3-7 basis points and spreads narrowing by 1-6 basis points, particularly highlighting the 4-year AA+ rated bonds which saw a yield drop of 7 basis points [2][10] Group 2 - The report anticipates continued demand for 3-5 year credit bonds in the upcoming weeks, with expected opening scales of 20.7 billion yuan and 22.8 billion yuan, although it cautions that the current spreads are at relatively low levels, limiting further compression [2][10] - The credit strategy suggests that the 4-year bonds have high convexity and should be closely monitored for their allocation value, especially as the amortized cost bond funds enter a concentrated opening period [3][36] - The report emphasizes that the overall sentiment in the bond market is improving, with credit bond yields generally declining and a notable performance in the 3-4 year segment, indicating a potential recovery in market conditions [17][32]

Core Insights - The article discusses the performance rankings of public pure fixed-income products issued by wealth management companies, focusing on those with a maturity period of 2-3 years and established for over a year [4][7]. Group 1: Market Performance - The bond market in 2025 experienced fluctuations with a continuous decline in interest rates. Many banks began issuing perpetual bonds to replace preferred shares to save on interest costs [5]. - By December 31, 2025, banks issued a record 71 perpetual bonds totaling 821.8 billion, with most new bonds having coupon rates between 2.0% and 3.0% [5]. - In 2025, 77 secondary capital bonds were issued, amounting to 934.67 billion, with an average coupon rate of 2.52%, down from 2.61% in 2024 [5]. Group 2: Product Performance - As of January 15, 2026, there were 980 public pure fixed-income products with a maturity of 2-3 years, of which 621 had disclosed annualized returns. The average weighted annualized return was 3.08%, with 131 products exceeding 3.5% [7]. - Seven wealth management companies made it to the ranking, with Xingyin Wealth Management having three products listed, while Minsheng Wealth Management had two, and others like Huaxia, Huizhou, Nanyin, Nongyin, and Xinyin each had one product [7]. Group 3: Highlighted Products - Huaxia Wealth Management's "Fixed Income Debt Type Closed-End Wealth Management Product 264" topped the list with a weighted annualized return exceeding 5%, achieving a return of 3.85% since inception. The product's investments include cash, bank deposits, interbank certificates, bonds, non-standard assets, and public funds, with a leverage level of 130.61% as of Q3 2025 [8]. - Xingyin Wealth Management's "Fengli Yuedong Stable Enjoyment Closed-End 12 Fixed Income Product" ranked second with a weighted annualized return of 4.92%. This product primarily invests in cash, bank deposits, and bonds, with over 40% of its top ten assets being secondary capital bonds issued between 2021 and 2022. Notably, its recent one-month annualized return reached 17.11%, surpassing all other products in the ranking [8].

Core Insights - The article discusses the performance rankings of public pure fixed-income products issued by wealth management companies, focusing on those with a minimum one-year establishment period and a 2-3 year investment horizon [4]. Market Performance - The bond market in 2025 experienced fluctuations with a downward trend in interest rates. Many banks began issuing perpetual bonds to replace preferred shares, aiming to reduce interest costs. By December 31, 2025, banks issued a record 71 perpetual bonds totaling 821.8 billion yuan, with most new bonds having coupon rates between 2.0% and 3.0% [5]. - The issuance of secondary capital bonds also expanded significantly, with 77 bonds issued in 2025, amounting to 934.67 billion yuan, and an average coupon rate of 2.52%, down from 2.61% in 2024 [5]. Product Overall Performance - As of January 15, 2026, there were 980 public pure fixed-income products with a 2-3 year term and at least one year of establishment. Among 621 products with complete annualized yield disclosures, the average weighted annualized yield was 3.08%, with 131 products exceeding 3.5% [6]. - Seven wealth management companies made it to the ranking list, with Xingyin Wealth Management featuring three products, while Minsheng Wealth Management had two, and Huaxia, Huizhou, Nanyin, Nongyin, and Xinyin Wealth Management each had one product listed [6]. Highlighted Product Analysis - Huaxia Wealth Management's "Fixed Income Debt Rights Closed-End Wealth Management Product 264H" topped the list with a weighted annualized yield exceeding 5%, achieving a historical annualized yield of 3.85%. The product's investment targets include cash, bank deposits, interbank certificates, bonds, non-standard assets (trust plans), and public funds, with a leverage level of 130.61% as of Q3 2025 [7]. - Xingyin Wealth Management's "Fengli Yuedong Stable Enjoyment Closed-End Product 12" ranked second with a weighted annualized yield of 4.92%. This product primarily invests in cash, bank deposits, and bonds, with over 40% of its top ten assets being secondary capital bonds issued between 2021 and 2022. Notably, its recent one-month annualized yield reached 17.11%, surpassing all other products in the ranking [7].