1. Report Industry Investment Rating - No information provided 2. Core Viewpoints - The central value of the trading duration of general credit bonds is stable around 2.2 years. As of March 20, the weighted trading durations of urban investment bonds and industrial bonds were 2.16 years and 2.29 years respectively, at the 90% and 74% historical quantiles since 2021. Among commercial bank bonds, the weighted average trading durations of secondary capital bonds, bank perpetual bonds, and general commercial financial bonds were 4.15 years, 3.41 years, and 1.73 years respectively. The duration quantile of secondary capital bonds was relatively high, while that of general commercial financial bonds remained at a relatively low historical level. For other financial bonds, the durations of securities company bonds, securities subordinated bonds, insurance company bonds, and leasing company bonds were 1.96 years, 2.87 years, 3.52 years, and 1.23 years respectively, all of which were longer than last week and at relatively high historical quantiles [2][9]. - The coupon duration congestion index has declined. After reaching its peak in March 2024, the index has fallen and is currently at the 48% level since March 2021 [12]. 3. Summary by Directory 3.1 Full - Variety Term Overview - The central value of the trading duration of general credit bonds is stable around 2.2 years. As of March 20, the weighted trading durations of urban investment bonds and industrial bonds were 2.16 years and 2.29 years respectively, at the 90% and 74% historical quantiles since 2021. Among commercial bank bonds, the weighted average trading durations of secondary capital bonds, bank perpetual bonds, and general commercial financial bonds were 4.15 years, 3.41 years, and 1.73 years respectively. For other financial bonds, the durations of securities company bonds, securities subordinated bonds, insurance company bonds, and leasing company bonds were 1.96 years, 2.87 years, 3.52 years, and 1.23 years respectively, all longer than last week and at relatively high historical quantiles [2][9]. - The coupon duration congestion index has declined. After reaching its peak in March 2024, the index has fallen and is currently at the 48% level since March 2021 [12]. 3.2 Variety Microscope 3.2.1 Urban Investment Bonds - The weighted average trading duration of urban investment bonds hovers around 2.37 years. The duration of Sichuan provincial urban investment bonds has extended to 4.05 years, while that of Henan provincial urban investment bonds has shortened to around 1.65 years. The historical quantiles of the durations of Jiangsu and Beijing district - level urban investment bonds have exceeded 90%, and the duration of Jiangsu prefecture - level urban investment bonds is approaching the highest level since 2021 [3][16]. 3.2.2 Industrial Bonds - The weighted average trading duration of industrial bonds has shortened compared to last week, generally around 1.94 years. The trading duration of the real estate industry has extended to 1.84 years, while that of the public utilities industry has shortened to 2.58 years. The trading duration of the building materials industry is at a relatively high historical quantile, while those of the transportation and coal industries are at relatively low historical quantiles [3][23]. 3.2.3 Commercial Bank Bonds - The duration of general commercial financial bonds has shortened to 1.73 years, at the 13.8% historical quantile, lower than the level of the same period last year. The duration of secondary capital bonds has shortened to 4.15 years, at the 86.4% historical quantile, higher than the level of the same period last year. The duration of bank perpetual bonds has extended to 3.41 years, at the 49% historical quantile, lower than the level of the same period last year [3][25]. 3.2.4 Other Financial Bonds - In terms of the weighted average trading duration, insurance company bonds > securities subordinated bonds > securities company bonds > leasing company bonds, at the 77.3%, 88.4%, 83.3%, and 66% historical quantiles respectively, all slightly higher than last week [3][28].

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]

1. Report Industry Investment Rating No information provided in the given content. 2. Core Viewpoints of the Report - The traditional credit bond investment strategy centered on "holding to maturity" has gradually become ineffective. Trading to increase returns or reduce drawdowns has become an important approach. "Valuation elasticity" is crucial in different market environments, and the report focuses on measuring the valuation elasticity of credit entities to guide investment decisions [8][9]. - High - elasticity entities show strong offensiveness in the yield - downward stage but perform poorly in the yield - upward stage. Low - elasticity entities are the opposite, showing certain resistance to decline in the yield - upward stage. Medium - elasticity entities' performance is generally between the two [3][26]. - Based on the yield performance of high, medium, and low - elasticity credit entities in different stages, credit bond portfolio rebalancing can be carried out according to the 3 - year AA+ medium - short note yield trend. The upper and lower limits of the 10 - year Treasury bond yield can be used to determine the timing of portfolio rebalancing [4][36]. 3. Summary According to the Catalog 3.1 How to Measure the Valuation Elasticity of Credit Entities - The valuation elasticity of each credit entity is measured by the relative fluctuation range of the spread during the "upward" or "downward" stages of the yield. From 2023, the time period is divided into 5 "upward", 6 "downward", and 2 "oscillating" stages based on the 3 - year AA+ medium - short note yield curve [1][10]. - Using non - guaranteed, public bonds in stock on March 13 as samples, calculate the excess spread change amplitude between individual bonds and the same - term, same - implied rating curve in each stage to obtain the average spread change of each credit entity. If the average upward or downward spread change of an entity is in the top 30% of issuers of the same type, it is defined as "high valuation elasticity"; if it is in the bottom 30%, it is "low valuation elasticity"; otherwise, it is "medium valuation elasticity" [1][12]. - If an entity is defined as "high valuation elasticity" at least 6 times and less than 5 times as "low valuation elasticity" in 11 yield upward or downward stages, it is a "high - elasticity entity"; if it is defined as "low valuation elasticity" at least 6 times and less than 5 times as "high valuation elasticity", it is a "low - elasticity entity"; if it is defined as "medium valuation elasticity" at least 6 times and less than 5 times as "high valuation elasticity" or "low valuation elasticity", it is a "medium - elasticity entity". 1149 issuers with non - guaranteed public bonds in stock are screened out, accounting for 39% of all public bond issuers, including 345 high - elasticity entities, 318 low - elasticity entities, and 486 medium - elasticity entities [2][14]. 3.2 Performance of Various Entities in Different Stages - High - elasticity entities show strong offensiveness in the yield - downward stage, with narrowing excess spreads, but perform poorly in the yield - upward stage. For example, during February 3 - August 4, 2023, and December 12, 2023 - August 5, 2024, the excess spreads of high - elasticity entities were significantly compressed by 31bp and 36bp respectively. In the yield - upward stage, they are sold off, and the excess spreads generally widen [26]. - Low - elasticity entities perform mediocrely in the yield - downward stage but show certain resistance to decline in the yield - upward stage. In 6 yield - downward cycles, the excess spreads of low - elasticity entities widened in 5 cycles, underperforming high - and medium - elasticity entities. In 5 adjustment processes, the excess spreads of low - elasticity entities narrowed by 1 - 5bp, showing better resistance to decline [26]. - The performance of medium - elasticity entities is generally between the two. Since August 2024, their yield trends have been basically consistent with the overall trend, and the excess spreads are mostly around 0bp [26]. - In terms of holding - period yields, high - elasticity entities perform better in the bond market yield - downward period, and low - elasticity entities are more resistant to decline in the bond market adjustment period. This characteristic is more obvious for AAA high - grade entities. In 6 yield - downward stages, the holding - period yields of AAA high - elasticity entities are higher than those of low - elasticity entities, while in 5 adjustment cycles, the losses of low - elasticity entities are smaller, and medium - elasticity entities are in between [30]. 3.3 Using the Upper and Lower Limits of the 10 - year Treasury Bond Yield to Determine the Timing of Portfolio Rebalancing - When the yield is at a high level and is expected to decline, increase the allocation of high - elasticity entities to pursue excess returns from spread compression. When the yield is at a low level and is expected to adjust, switch to medium - or low - elasticity entities, which are more resistant to decline than high - elasticity entities and may obtain excess spreads. It is recommended to choose low - elasticity urban investment entities first [36]. - Since 2025, the yield trend of 3 - year AA+ medium - short notes is basically the same as that of the 10 - year Treasury bond but slightly lags behind. Since the third quarter of 2025, the 10 - year Treasury bond yield has been running in a range of 1.75% - 1.9%. The upper and lower limits of the 10 - year Treasury bond yield can be used to determine the timing of portfolio rebalancing. As of March 16, the 10 - year Treasury bond yield is 1.83%, in the middle of the range. Considering that the spread between the 3 - year AA+ medium - short note and the 10 - year Treasury bond has reached a low point, there may be a risk of valuation adjustment for credit bonds. High - elasticity entities can be reduced, and low - or medium - elasticity entities can be increased [4][36][37].

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 - No relevant information provided. 2. Core View of the Report - The overall duration of credit bonds has shortened. As of March 6, the weighted average transaction terms of urban investment bonds and industrial bonds were 2.09 years and 2.27 years respectively. Among commercial bank bonds, the weighted average transaction terms of secondary capital bonds, bank perpetual bonds, and general commercial financial bonds were 3.88 years, 3.47 years, and 1.74 years respectively, with the general commercial financial bonds at a relatively low historical level. For other financial bonds, the durations of securities company bonds, securities subordinated bonds, insurance company bonds, and leasing company bonds were 1.87 years, 2.21 years, 3.12 years, and 1.26 years respectively. The durations of securities subordinated bonds and leasing company bonds have shortened compared to last week, and the historical quantile of the duration of securities company bonds is at a relatively high historical level [2][9]. 3. Summary by Directory 3.1 Full Variety Term Overview - The overall duration of credit bonds has shortened. As of March 6, the weighted average transaction terms of urban investment bonds and industrial bonds were 2.09 years and 2.27 years respectively. Among commercial bank bonds, the weighted average transaction terms of secondary capital bonds, bank perpetual bonds, and general commercial financial bonds were 3.88 years, 3.47 years, and 1.74 years respectively, with the general commercial financial bonds at a relatively low historical level. For other financial bonds, the durations of securities company bonds, securities subordinated bonds, insurance company bonds, and leasing company bonds were 1.87 years, 2.21 years, 3.12 years, and 1.26 years respectively. The durations of securities subordinated bonds and leasing company bonds have shortened compared to last week, and the historical quantile of the duration of securities company bonds is at a relatively high historical level [2][9]. - The coupon duration congestion index is relatively stable. After reaching its highest value in March 2024, the coupon duration congestion index has declined. This week, it is the same as last week and is currently at the 64.5% level since March 2021 [12]. 3.2 Variety Microscope 3.2.1 Urban Investment Bonds - The weighted average transaction term of urban investment bonds hovers around 2.09 years. Among them, the duration of Sichuan provincial urban investment bonds has extended to 4.48 years, and the transaction duration of Guangxi provincial urban investment bonds has shortened to around 0.95 years. At the same time, the historical quantiles of the durations of Zhejiang district - level and Henan prefecture - level urban investment bonds have exceeded 90%, and the duration of Fujian district - level urban investment bonds is approaching the highest level since 2021 [3][16]. 3.2.2 Industrial Bonds - The weighted average transaction term of industrial bonds has shortened compared to last week and is generally around 2.27 years. The transaction duration of the food and beverage industry has extended to 1.27 years, and the transaction duration of the non - ferrous metal industry has shortened to 1.61 years. In addition, the transaction duration of the coal industry is at a relatively low historical quantile, while the construction materials and public utilities industries are at relatively high historical quantiles [3][23]. 3.2.3 Commercial Bank Bonds - The duration of general commercial financial bonds has extended to 1.74 years, at the 14% historical quantile, higher than the level of the same period last year. The duration of secondary capital bonds has shortened to 3.88 years, at the 69.6% historical quantile, lower than the level of the same period last year; the duration of bank perpetual bonds has extended to 3.47 years, at the 55.2% historical quantile, higher than the level of the same period last year [3][26]. 3.2.4 Other Financial Bonds - In terms of the weighted average transaction term, insurance company bonds > securities subordinated bonds > securities company bonds > leasing company bonds, which are at the 59.6%, 55.2%, 77.8%, and 67.7% historical quantiles respectively. The durations of securities subordinated bonds and leasing company bonds have both slightly shortened compared to last week [3][29].

Core Insights - The report from GF Securities indicates that stocks and securities investment funds are the most favored domestic investment assets for insurance institutions in 2026 [1][3] - The survey conducted by the China Banking and Insurance Asset Management Association reflects the asset allocation outlook of 127 insurance institutions, covering major asset classes, market judgments, and preferences [2] Asset Allocation - Insurance institutions are expected to moderately or slightly increase their stock investments, while the allocation to bank deposits and bonds is anticipated to remain stable compared to 2025 [3] Bond Market Outlook - Most insurance institutions hold a neutral stance on the overall bond market for 2026, with duration strategies expected to remain unchanged. The 10-year government bond yield is projected to be in the range of 1.8%-1.9%, while the 30-year yield is expected to be between 2.2%-2.4% [4] - Over half of the insurance institutions expect the yield center for high-grade credit bonds to be in the range of 2.0%-2.5%, with credit spreads anticipated to show a fluctuating trend. High-grade industrial bonds, perpetual bonds from banks, secondary capital bonds, and convertible bonds are favored [4] A-Share Market Outlook - A majority of insurance institutions are optimistic about the A-share market in 2026, with plans to slightly increase their allocation to A-shares. They favor stocks in the Sci-Tech 50, CSI 300, CSI A500, and ChiNext, particularly in sectors such as electronics, non-ferrous metals, power equipment, computers, communications, pharmaceuticals, and basic chemicals [5] - Key investment themes include semiconductors, national defense, AI, robotics, energy metals, commercial aerospace, high-dividend stocks, and innovative pharmaceuticals, with corporate profit recovery and liquidity environment being the main factors influencing the A-share market [5] Overseas Investment Preferences - Hong Kong stocks are the most favored overseas investment option for insurance institutions in 2026, with gold and US stocks also receiving significant attention. Half of the asset management institutions plan to slightly increase their allocation to Hong Kong stocks, while 40% intend to maintain their current allocation [6] Long-term Trends for Listed Insurers - The investment asset scale of listed insurance companies has been growing at double-digit rates, with an increasing proportion of equity investments and enhanced active management capabilities, leading to improved equity investment elasticity. The long-term trend of the interest rate spread is expected to improve due to stable long-term rates and capital market growth [7] Investment Recommendations - The report suggests focusing on the insurance sector, with specific stock recommendations including China Ping An (A/H), China Life (A/H), China Taiping (H), New China Life (A/H), China Pacific Insurance (A), China People’s Insurance Group (H), China Property & Casualty Insurance (H), and AIA Group (H) [8]

Group 1 - The core viewpoint of the articles indicates that insurance institutions are optimistic about domestic investments in stocks and securities investment funds for 2026, with a tendency to slightly increase stock investments [1] - Most insurance institutions plan to maintain their allocation ratios for bank deposits, bonds, securities investment funds, and other financial assets similar to 2025, with some intending to moderately increase stock investments [1] - In the bond market, insurance institutions hold a neutral outlook for 2026, favoring high-grade corporate bonds, perpetual bonds, subordinated debt, and convertible bonds, primarily focusing on bonds with maturities between 10 to 30 years [1] Group 2 - Regarding the A-share market, insurance institutions are generally optimistic for 2026, favoring indices such as the Sci-Tech Innovation 50, CSI 300, and ChiNext, and industries like electronics, non-ferrous metals, and pharmaceuticals [1] - The main factors influencing the A-share market are expected to be corporate profit recovery and liquidity conditions, with most insurance institutions planning to slightly increase their allocation to A-shares [1] - In terms of fund investments, insurance asset management institutions prefer equity funds, secondary bond funds, and mixed equity funds, with nearly half planning to slightly increase their allocation to public funds [2] Group 3 - For overseas investments, Hong Kong stocks are the most favored by insurance institutions for 2026, with gold and US stocks also receiving attention [2] - About half of the insurance asset management institutions plan to slightly increase their allocation to Hong Kong stocks, while 40% of insurance companies intend to maintain their current allocation levels [2]

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]

1. Report Industry Investment Rating - No relevant content provided 2. Core Viewpoints of the Report - As of January 30, the weighted average transaction terms of urban investment bonds and industrial bonds were 2.26 years and 2.43 years respectively. Among commercial bank bonds, the weighted average transaction terms of secondary capital bonds, bank perpetual bonds, and general commercial financial bonds were 4.00 years, 3.52 years, and 2.05 years respectively, with secondary capital bonds at a relatively high historical level. The durations of other financial bonds, such as securities company bonds, securities subordinated bonds, insurance company bonds, and leasing company bonds, were 1.70 years, 2.09 years, 3.26 years, and 1.44 years respectively. The overall duration of other financial bonds was slightly shorter than the previous week, and the historical quantile of the duration of leasing company bonds was at a relatively high historical level [2][9]. - The coupon duration congestion index has increased. After reaching its highest value in March 2024 and then declining, the index rose this week compared to last week and is currently at the 64% level since March 2021 [11]. 3. Summary by Relevant Catalog 3.1 All - Variety Term Overview - The weighted average transaction terms of urban investment bonds and industrial bonds were 2.26 years and 2.43 years respectively. Among commercial bank bonds, the weighted average transaction terms of secondary capital bonds, bank perpetual bonds, and general commercial financial bonds were 4.00 years, 3.52 years, and 2.05 years respectively. The durations of securities company bonds, securities subordinated bonds, insurance company bonds, and leasing company bonds were 1.70 years, 2.09 years, 3.26 years, and 1.44 years respectively [2][9]. - The coupon duration congestion index increased this week compared to last week and is currently at the 64% level since March 2021 [11]. 3.2 Variety Microscope Urban Investment Bonds - The weighted average transaction term of urban investment bonds hovered around 2.26 years. The duration of Shaanxi provincial - level urban investment bonds extended to 9.16 years, while the transaction duration of Hebei provincial - level urban investment bonds shortened to around 1.19 years. The historical quantiles of the durations of prefecture - level cities in Hunan, district - level counties in Jiangsu, and district - level counties in Beijing have exceeded 90%, and the duration of prefecture - level cities in Anhui is approaching the highest since 2021 [3][15]. Industrial Bonds - The weighted average transaction term of industrial bonds remained the same as last week, generally around 2.43 years. The transaction duration of the coal industry extended to 2.25 years, and the transaction duration of the public utilities industry shortened to 2.75 years. The transaction durations of the food and beverage and real estate industries are in the neutral historical quantile range, while those of the non - ferrous metals and pharmaceutical and biological industries are at relatively high historical quantiles [3][21]. Commercial Bank Bonds - The duration of general commercial financial bonds extended to 2.05 years, at the 53.3% historical quantile, higher than the same period last year. The duration of secondary capital bonds shortened to 4.00 years, at the 80.2% historical quantile, higher than the same period last year. The duration of bank perpetual bonds shortened to 3.52 years, at the 56.9% historical quantile, higher than the same period last year [3][24]. Other Financial Bonds - In terms of the weighted average transaction term, insurance company bonds > securities subordinated bonds > securities company bonds > leasing company bonds, at historical quantiles of 65.4%, 46.6%, 60.4%, and 86.9% respectively. The overall duration of other financial bonds was slightly shorter than last week [3][27].