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].

Group 1: Credit Strategy - The report emphasizes a focus on high convexity coupon products across different maturities, suggesting a strategic allocation from short to long durations [11][19] - The credit bond market has seen a general decline in yields, with a divergence in credit spreads, indicating a mixed performance among different bond types [11][6] - The current market conditions present an important window for coupon allocation, particularly in the 3.5-4y, 5.5-6y, and 7.5-8y segments [19][32] Group 2: Market Overview - The yield for 1-year short-term bonds is currently in the range of 1.70%-1.80%, which is approximately 7-9 basis points higher than similar maturity certificates of deposit, indicating a favorable comparison [25][30] - For 2-3 year bonds, the yields are between 1.80%-2.15%, with spreads expected to remain low, making them attractive for investment [26][30] - The 4-5 year bonds show high convexity, with a focus on the value of public bonds, as their spreads have widened slightly, improving their relative value [29][32] Group 3: Policy and Events - The National Development and Reform Commission has issued guidelines for government investment funds, marking a systematic approach to fund allocation and investment focus [4] - Regulatory bodies are facilitating loan extensions for real estate companies, which is expected to improve their cash flow and market expectations [4] - Vanke has proposed multiple debt restructuring plans, indicating proactive measures to reach consensus with creditors [4]

Group 1 - The domestic capital market in 2025 shows a significant "strong stock and weak bond" pattern, with the bond market experiencing a downward trend while the A-share market performs strongly due to technology themes and economic recovery expectations [1] - The bond market's performance diverges from fundamental data, particularly in long-term bonds of 10 years and above, which reflects a weakening trend [1][3] - The credit bond market shows a narrowing of credit spreads in the first half of the year, despite some defaults in non-standard financing [5] Group 2 - For 2026, the domestic capital market is expected to exhibit a synchronized upward trend in both stocks and bonds, supported by a dovish monetary policy and fiscal stimulus [7][10] - The monetary policy remains "moderately loose," with a focus on maintaining stable financing conditions, although the frequency and magnitude of rate cuts may be limited [10][11] - The macroeconomic environment in 2025 demonstrates resilience despite pressures from geopolitical conflicts and trade tensions, with GDP growth expected to meet the target of around 5% [14] Group 3 - The investment strategy suggests that opportunities in the market are more abundant compared to early 2025, with long-term bonds and local government bonds showing potential for stable returns [18] - The recommendation includes cautious allocation to short-term bonds issued by weaker regional platforms while managing credit risk [18] - The strategy also considers trading in certain long-duration government bonds to capitalize on favorable market conditions [18]

Group 1 - The report indicates that credit spreads have generally widened, with a focus on prioritizing mid-to-short-term coupon assets for investment [1][10] - The current yield for 1-year products is in the range of 1.72%-1.80%, with spreads below the central level since 2024 by 13-19 basis points [2][24] - For 2-3 year products, yields are between 1.83%-2.10%, and spreads are in the range of 19-42 basis points, with a recommendation to prioritize mid-to-short-term coupon assets due to high demand from funds and wealth management [2][25] Group 2 - The report notes that the 4-5 year products have yields ranging from 2.0%-2.35% and spreads between 26-55 basis points, with a marginal recovery in coupon configuration value [3][26] - For products over 5 years, yields are between 2.23%-2.76% with spreads from 24-64 basis points, indicating a need for cautious trading participation due to market volatility [3][26] - The report highlights that the overall sentiment in the bond market remains cautious, with credit spreads showing weak compression momentum [6][24] Group 3 - Key policies include the Shenzhen Municipal Financial Office emphasizing the prevention and resolution of financial risks, and the second meeting of bondholders for "22 Vanke MTN004" [4][28] - The report mentions that nearly 70% of bond-issuing entities in Henan have completed the repayment of hidden debts, indicating significant progress in debt resolution and market transformation [4][28] - The report also notes the first appearance of Guizhou's municipal state-owned enterprise in the capital market, marking a significant event in the current round of debt resolution [4][28]

Group 1: Credit Strategy - The report emphasizes the importance of focusing on structural opportunities in the short to medium-term credit products, particularly in the 2-3 year and 4-5 year categories, where yields are currently favorable [1][26][27] - For 2-3 year products, yields are primarily in the range of 1.84%-2.14% with spreads between 17-42 basis points, indicating a stable demand for short-term assets due to regulatory adjustments and cautious investment strategies [1][26] - The 4-5 year products show yields between 2.0%-2.5% and spreads of 22-60 basis points, suggesting a recovery in the attractiveness of these assets despite recent market volatility [1][27] Group 2: Market Overview - The credit bond market has seen a general decline in yields, with a mixed performance in credit spreads, influenced by a stable funding environment and recent economic data [6][10] - The central economic work conference has indicated potential for further monetary easing, which may affect market sentiment and trading strategies moving forward [6][21] - The report notes that the overall sentiment in the bond market remains weak, with caution advised for institutions with less stable funding [6][21] Group 3: Key Policies and Events - The report highlights significant corporate actions, such as China Metallurgical Group's sale of assets to enhance liquidity and focus on core operations, which may positively impact its valuation [3][28] - The Yunnan provincial government has introduced measures to regulate public-private partnership projects, aiming to prevent hidden local government debts, which could influence future financing conditions [3][29] - The central economic work conference has reiterated the need to address risks associated with local government financing platforms, suggesting a more proactive approach to debt restructuring and management [4][30]

Group 1: Credit Strategy - The report emphasizes the need to monitor redemption disturbances and suggests seizing the value of coupon assets during high points [2][11] - Current yields for 1-year products range from 1.73% to 1.82%, with spreads within 20 basis points, which is lower by 10-16 basis points compared to the lowest point in 2024, indicating low cost-effectiveness [2][32] - For 2-3 year products, yields are between 1.87% and 2.12%, with spreads from 17 to 35 basis points, still having 1-8 basis points of room compared to 2024's lowest spreads [2][32] - The 4-5 year products show yields from 2.03% to 2.31%, with spreads between 23 and 47 basis points, which have compressed slightly due to institutional configurations, enhancing cost-effectiveness [2][32] - Long-term credit products (5 years and above) offer coupon advantages but test the stability of liabilities, with institutions needing to be cautious in the current volatile market [3][34] Group 2: Market Overview - The credit bond market has seen a general rise in yields, with a divergence in credit spreads, influenced by new fund sales regulations and policy expectations ahead of major meetings [11][12] - Short and medium-term pure bond fund net values have declined, with a cumulative drop of 1.71 basis points and 11.82 basis points respectively over the week [12][18] - The report notes that institutional investors have been net sellers of bonds, with a total net sell-off of 22.477 billion yuan, particularly in the 7-10 year category, while insurance and wealth management products continue to increase their credit bond allocations [22][24] Group 3: Key Policies and Events - The report highlights the optimization of merger note mechanisms by the China Interbank Market Dealers Association, which broadens the support for mergers and enhances funding flexibility [4][36] - The restructuring of state-owned enterprises in Shanxi province aims to improve strategic decision-making efficiency and clarify regulatory boundaries [4][37] - In Chongqing, several state-owned enterprises have consolidated financial equity through stock transfers, leading to more effective management of financial resources [4][37]