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

Group 1 - The report discusses the issuance of special government bonds amounting to 300 billion yuan to support large state-owned commercial banks in capital replenishment, as announced by Premier Li Qiang on March 5 [6][9]. - The National Financial Regulatory Administration indicated that besides central government issuance, market-driven methods could also be explored to mobilize more social funds, including insurance capital [6][9]. - In 2025, large commercial banks issued a total of 650 billion yuan in secondary capital bonds, an increase from 531 billion yuan in the previous year, while the issuance from joint-stock commercial banks and city commercial banks showed a significant decline [10][11]. Group 2 - The net financing amount of secondary capital bonds decreased from 413.9 billion yuan in 2024 to 367.1 billion yuan in 2025, indicating a trend of reduced net financing in the secondary capital bond market [10][11]. - The report highlights a structural differentiation in the issuance of bonds, with some banks like China Construction Bank and Bank of Communications seeing a decrease in raised funds, while others like Bank of China and Industrial and Commercial Bank of China experienced significant increases [10][11]. - The net financing demand of the banking system increased, with the combined net financing amount of perpetual bonds and TLAC rising to 853.7 billion yuan in 2025, primarily driven by the increase in net financing from perpetual and TLAC bonds [10][11]. Group 3 - The report notes a downward trend in the yields of AAA-rated secondary capital bonds from March to July 2026, with the most significant decline observed in the 3-year bonds, which fell by 9.3 basis points in one month [19][20]. - The yields of AA+ rated secondary capital bonds also showed a downward trend, with the performance of secondary bonds outperforming perpetual bonds [20][31]. - The report attributes the strengthening of secondary capital bonds post-policy announcement to two main factors: the increased safety margin from special government bond injections and market expectations of reduced future supply of secondary bonds [31][32]. Group 4 - The credit bond market showed increased trading activity, with transaction volumes rising from 0.79 trillion yuan to approximately 1.43 trillion yuan, indicating a recovery in market activity [33]. - The report suggests that the upcoming issuance of approximately 520 billion yuan in 3-5 year amortized products will face reallocation issues, which may compress yields further [33]. - The report recommends focusing on AAA-rated state-owned banks and joint-stock secondary capital bonds for potential investment opportunities, especially after a yield decline of 6-9 basis points within a month [32][33].

Group 1 - The core view of the report emphasizes that duration volatility may have a greater impact on perpetual bonds than tail credit issues [1] - The 2025 bank subordinated bond market showed stable issuance with differentiated spreads, where the net issuance of tier 2 capital bonds decreased significantly due to a drop in issuance from joint-stock banks [7][9] - The report identifies three main changes behind the stable issuance and high volatility in the bank subordinated bond market: the divergence in bank balance sheet expansion, instability in the configuration of long-term subordinated bonds, and the dual nature of tail risks regarding redemption [11][19][24] Group 2 - In the primary market, the issuance of bank subordinated bonds is expected to remain stable, with state-owned banks projected to issue around 9,000 billion yuan in perpetual bonds and 2,500 billion yuan in TLAC bonds in 2026 [27][28] - The secondary market strategy suggests focusing on the stability of the liability side and the redemption aspect of credit, with limited spread space for short-duration bonds and sufficient spread for long-duration bonds, but ongoing instability may disrupt the market [30][41] - The report anticipates that tail risks will continue to exist, particularly for small and medium-sized banks, which may face pressures leading to either non-redemption or non-renewal of bonds [33][35]

Core Insights - The issuance of bonds by commercial banks in China has surged, reaching a total of 2.95 trillion yuan in 2023, marking a year-on-year increase of 14.79% [1] - The primary types of bonds issued are subordinated debt and perpetual bonds, which together account for approximately 1.38 trillion yuan [1][2] - Major banks like Industrial and Commercial Bank of China and China Construction Bank have announced their bond issuance plans for 2026, with ICBC planning to issue up to 488 billion yuan and CCB setting a cap of 700 billion yuan for various capital instruments [1] Group 1 - The increase in bond issuance is driven by three main factors: optimizing capital structure through instruments like perpetual bonds, raising long-term funds to improve liability structure, and favorable market conditions for expanding issuance [2] - The trend of increasing bond issuance is expected to continue into 2026, positively impacting bank operations, financial markets, and the real economy [2][3] - The issuance of bonds enhances banks' capital adequacy ratios and risk resilience, while also providing quality investment options for institutional investors [2] Group 2 - The favorable monetary and macroeconomic policies are expected to support the continued growth of bond issuance by banks [3] - The demand for bonds is also driven by banks' operational needs and their mission to serve the real economy [3]

Core Viewpoint - Major Chinese banks, including Industrial and Commercial Bank of China (ICBC) and China Construction Bank (CCB), have announced their bond issuance plans for 2026, indicating a strong focus on raising capital through various debt instruments [1] Group 1: Bond Issuance Plans - ICBC plans to issue financial bonds not exceeding 488 billion yuan [1] - CCB intends to issue capital instruments and non-capital debt instruments totaling no more than 700 billion yuan [1] - Other state-owned banks, such as Agricultural Bank of China and Postal Savings Bank of China, are also reviewing their future financial bond and capital tool issuance limits [1] Group 2: Market Trends - As of November 9, the total bond issuance by commercial banks for the year has reached 2.88 trillion yuan [1] - The combined issuance of Tier 2 capital bonds and perpetual bonds (referred to as "two perpetual bonds") is approximately 1.37 trillion yuan, showing little change compared to the same period last year [1] - Financial bonds, including bank "two perpetual bonds" and TLAC (Total Loss-Absorbing Capacity) bonds, are becoming core assets for asset management institutions [1]

Core Viewpoint - Major Chinese banks, including Industrial and Commercial Bank of China (ICBC) and China Construction Bank (CCB), have announced their bond issuance plans for 2026, indicating a strong appetite for raising capital through various debt instruments [1][2]. Group 1: Bond Issuance Plans - ICBC plans to issue financial bonds up to 488 billion yuan for 2026, an increase of approximately 38 billion yuan from its 2025 issuance plan [2]. - CCB's bond issuance plan includes a total of up to 700 billion yuan, with capital instruments not exceeding 450 billion yuan and TLAC bonds not exceeding 250 billion yuan [2]. - Other state-owned banks, such as Agricultural Bank of China and Postal Savings Bank, are also considering their bond issuance plans for 2026, although specific amounts are yet to be disclosed [1][2]. Group 2: Market Trends and Statistics - As of November 9, 2023, the total bond issuance by commercial banks for the year reached 2.88 trillion yuan, with subordinated and perpetual bonds (referred to as "二永债") accounting for approximately 1.37 trillion yuan [1][4]. - The issuance of subordinated bonds has decreased by about 24.9% year-on-year, while perpetual bonds have seen an increase of 18.4% [4]. - State-owned and joint-stock banks are the primary issuers of subordinated and perpetual bonds, accounting for 81.3% of the total market issuance [4]. Group 3: Investment Trends - Financial bonds, including subordinated and TLAC bonds, are becoming core assets for asset management institutions, driven by an increasing demand for fixed-income products [6]. - The market for financial bonds is now the largest investment segment for non-bank institutions, offering higher market value compared to traditional interest rate bonds [6]. - As of the third quarter of 2025, public funds held 43.6% of the market value of bank ordinary bonds, with significant allocations to subordinated and perpetual bonds [7].

Core Viewpoint - The issuance of various types of bonds by commercial banks has reached 2.88 trillion yuan in 2023, with a significant portion being secondary capital bonds and perpetual bonds, indicating a stable market for these financial instruments [1][5]. Group 1: Bond Issuance Plans - Industrial and Commercial Bank of China (ICBC) plans to issue up to 488 billion yuan in financial bonds for 2026, an increase of approximately 38 billion yuan from the previous year's plan [2][3]. - China Construction Bank (CCB) has announced a total bond issuance plan of up to 700 billion yuan for 2026, including capital instruments and TLAC bonds [2][3]. - Other major state-owned banks, such as Agricultural Bank of China and Postal Savings Bank, are also reviewing their bond issuance plans for 2026, although specific amounts are yet to be disclosed [4]. Group 2: Market Trends and Dynamics - The total issuance of secondary capital bonds and perpetual bonds (collectively referred to as "二永债") has reached approximately 1.37 trillion yuan in 2023, with a notable decrease in secondary capital bonds by about 24.9% year-on-year, while perpetual bonds have increased by 18.4% [5][6]. - State-owned banks and joint-stock banks dominate the issuance of "二永债," accounting for 81.3% of the total market share [5]. - A significant redemption wave is observed in the "二永债" market, with 1.15 trillion yuan maturing by the end of November 2023 [5]. Group 3: Asset Management and Investment Trends - Financial bonds, including "二永债" and TLAC bonds, are becoming core assets for asset management institutions, driven by an increasing demand for fixed-income products [7][8]. - The market for financial bonds is now the largest investment segment for non-bank institutions, offering higher safety and market value compared to other debt instruments [7]. - As of Q3 2025, public funds have a significant allocation in bank bonds, with 43.6% in ordinary bank bonds, 28.5% in secondary bonds, and 9.8% in perpetual bonds [8].

Group 1 - The report focuses on how to accurately and finely track the institutional trading behavior of perpetual bonds from the limited available data dimensions [1][10] - "Other" bonds mainly refer to commercial bank ordinary bonds, secondary capital bonds, and PPN, excluding other separately listed interbank bond types [1][10] - The trading data and transaction data roughly correspond to three categories: commercial bank bonds, perpetual bonds, and PPN [1][10] Group 2 - For bonds with a maturity of less than 5 years, over 85% are commercial bank bonds and PPN, with commercial bank bonds accounting for about 50% and PPN for about 35% [2][12] - The remaining portion includes a small amount of TLAC bonds and perpetual bonds [2][12] - For bonds with a maturity of more than 5 years, approximately 90% to 95% are secondary capital bonds and perpetual bonds, with a small amount of TLAC bonds and PPN [3][23] Group 3 - Bank perpetual bonds are primarily classified as "other" bonds with a maturity of over 30 years, showing a high correlation in scale and trend with the trading volume of bank perpetual bonds [4][26] - Secondary capital bonds are the main component of "other" bonds with maturities between 5 to 15 years, with a significant correlation observed in the 7-10 year and 10-15 year maturity segments [5][31] - The issuance period of secondary capital bonds is generally structured as 5+5 years or 10+5 years, leading to a fixed difference of 5 years between the exercise period and maturity period [5][40]

1. Report Industry Investment Rating No relevant content provided in the report. 2. Core Viewpoints of the Report - Since July, the allocation demand for credit bonds from funds, other product categories, and insurance has increased. Credit spreads have mostly narrowed or remained flat due to strong demand, with 1Y varieties showing strong resistance to decline and lower-rated bonds performing better than higher-rated ones [1][10][11]. - Currently, both credit bond coupons and credit spreads are at low levels, and the market trend is more dependent on institutional allocation demand. It is necessary to closely monitor institutional behavior, buying sentiment, and the potential compression space of credit spreads [1][12]. - Overall, the supply - demand pattern in July is favorable for credit bonds, and there is still a small amount of compression space for credit spreads. Specific strategies include focusing on short - to medium - duration bonds with credit rating sinking, and high - grade 10Y bonds have relatively large potential compression space for credit spreads [3][22]. - In the bank capital bond market, although the spread protection is thin, there is still compression space. Long - duration bonds of large banks and 2 - 3 year bonds of small and medium - sized banks are recommended [5]. 3. Summary by Related Catalogs 3.1. Credit Bond Market Overview - From July 1 - 11, funds' net purchase of credit bonds reached 88.5 billion yuan, a year - on - year increase of 39.1 billion yuan. Other product categories and insurance had net purchases of 31.3 billion and 15.2 billion yuan respectively, with year - on - year increases of 7.8 billion and 5 billion yuan [1][11]. - From July 7 - 11, with the convergence of funds and the rotation of negative factors, the bond market fluctuated upwards. Credit bonds, due to strong allocation demand, saw most credit spreads narrow or remain flat [10]. 3.2. Factors Affecting Credit Bond Market 3.2.1. Institutional Behavior - Fund net trading volume of credit bonds is a sensitive indicator related to credit spread trends. Maintaining a daily net purchase of over 500 million yuan helps keep credit spreads low. From July 7 - 10, the rolling 5 - day net purchase was 1 - 1.4 billion yuan, but it dropped to 740 million yuan on the 11th, and was below 500 million yuan on the 10th and 11th [2][12]. 3.2.2. Buying Sentiment - The TKN成交占比 is used to measure buying sentiment. A stable TKN成交占比 above 75% indicates good buying sentiment. From July 7 - 11, as yields rose, the TKN成交占比 declined, with three days below 70%, but the rolling 5 - day average was around 70% [2][16]. 3.2.3. Potential Compression Space of Credit Spreads - By observing the position of credit spreads relative to the mean - 2 times the standard deviation, it is found that currently, each variety still has a small amount of compression space, with 10Y varieties having relatively large potential [3][22]. 3.3. Specific Bond Types Analysis 3.3.1. Urban Investment Bonds - From July 1 - 13, urban investment bonds had a net financing of 28.8 billion yuan. The primary market issuance sentiment was good, with the proportion of full - subscription multiples over 3 times remaining at 61%. The issuance rate of long - term bonds decreased significantly, with the 10 - year average dropping to 2.14% [30][32]. - In the secondary market, short - term bonds were resistant to decline, while the yields of 3 - 10Y bonds increased. The trading activity decreased, and Shenzhen Metro had many high - valuation transactions [35][38]. 3.3.2. Industrial Bonds - From July 1 - 13, industrial bond issuance and net financing increased year - on - year. The issuance sentiment weakened slightly, and the proportion of long - term issuance over 5 years decreased significantly. The buying sentiment in the secondary market weakened, and the trading duration increased [40][42]. 3.3.3. Bank Capital Bonds - From July 7 - 13, several banks issued secondary capital bonds and perpetual bonds. In the secondary market, yields generally rose, spreads showed differentiation, and low - grade, short - duration bonds performed better. Currently, credit spreads are at relatively low levels, but there is still compression space [45][46]. 3.3.4. TLAC Bonds - By comparing the yields of 3Y, 5Y, and 10Y AAA - secondary capital bonds with TLAC bonds, the spreads are analyzed. As of July 11, 2025, the 3Y, 5Y, and 10Y spreads were 3.1bp, 3.8bp, and 1.4bp respectively, indicating that 10 - year TLAC bonds are more cost - effective [53]. 3.3.5. Commercial Financial Bonds - Since 2021, the valuation of 3Y AAA commercial financial bonds has generally followed the trend of interest - rate bonds, with a stable spread center. As of July 11, the credit spread was 14bp, at a relatively low level [57].

Group 1: Report Summary - Investment Rating: Not provided in the report - Core View: In the second half of 2025, credit bond investment should focus on three elements: the trend of funds and interest rates, the supply - demand pattern of credit bonds, and the cost - effectiveness of different varieties. Interest rates may continue to decline in a volatile manner, making the coupon value of credit bonds prominent, but the valuation volatility may increase. The overall supply of credit bonds may be difficult to expand, and the configuration demand may weaken from August to December. Different investment strategies are recommended for different periods and varieties [1][18] Group 2: 1. Steady Coupon as the Foundation, Grasp the Trading Rhythm 1.1. Short - to Medium - Duration Credit Spread Compression for Coupon Income, Seize Phased Opportunities in Long - Duration Bonds - H1 2025 Review: The credit bond market experienced an increase in yields and a widening of credit spreads from January to mid - March, followed by a rotation of the market to medium - to long - duration and then ultra - long - duration bonds from April to June. The main factors in the first quarter were the tight funds and the change in wealth management scale. In mid - to late March, the bond market recovered, driven by supply shrinkage and the cost - effectiveness of varieties. From April to June, the market was affected by interest rate fluctuations and the shift of the funds' central point [12][13] - June 2025 Highlights: The long - duration credit bond market was activated, mainly due to the compression of short - to medium - duration credit spreads to historical lows and the increased demand from funds, insurance, and other products. The scale of credit bond ETFs increased by 7.7 billion yuan in June, which also drove the demand for some long - duration component bonds [14][16] - H2 2025 Outlook: Interest rates may continue to decline in a volatile manner. The supply of credit bonds may be difficult to expand, with the decrease in urban investment bonds offset by the increase in industrial bonds. The wealth management scale usually increases significantly in July but weakens from August to December. The rectification of wealth management's net - value smoothing methods may suppress the demand for ultra - long - duration and low - rated medium - to long - duration bonds. It is recommended to increase positions in July, take profits in August, and reduce credit bond positions from August to December, switching to inter - bank certificates of deposit and interest - rate bonds [18][19][21] - Variety Cost - Effectiveness: The 10Y high - grade credit bonds have relatively large potential for credit spread compression. As of June 30, the credit spreads of 10Y high - grade medium - term notes are still 8 - 11bp higher than the average. Short - to medium - duration credit spread compression may still be the dominant strategy. Bonds with a yield of 2.0% - 2.2% in the 1 - 3 - year AA and AA(2) categories have high allocation value. High - grade 5 - year bonds can be considered when the credit spread adjusts to the mean + 1 standard deviation [22][30][35] 1.2. Grasp the Trading Rhythm of Bank Capital Bonds 1.2.1. Difficult for Bank Capital Bond Supply to Expand in H2 2025 - H1 2025 Review: The supply of bank capital bonds increased slightly. The net financing of secondary capital bonds increased year - on - year, while that of perpetual bonds decreased. The city commercial banks increased their issuance scale, while the supply from rural commercial banks was weak [39] - H2 2025 Outlook: The demand for new capital bonds from the Big Four banks may decrease after the capital injection in June. Although small and medium - sized banks may increase issuance if the cost is low, the overall net supply is difficult to expand [40] 1.2.2. Narrower Bandwidth for Band - Trading in Bank Capital Bonds, Reverse Trading May Yield Higher Win - Rates - H1 2025 Review: The yields of bank capital bonds showed differentiation. The yields of 1 - 5Y large - bank bonds generally increased, while those of 10Y secondary capital bonds and 1 - 4Y small - and medium - bank bonds mostly decreased. The credit spreads of most varieties compressed, with short - duration and low - grade bonds performing better [44] - H2 2025 Outlook: The bank capital bonds still have trading opportunities following interest - rate bonds, but the credit spread compression space is limited. Reverse trading (increasing positions during adjustments) may have a higher win - rate. The 4 - year and 6 - year bonds have higher riding yields and better holding experiences [50][51] Group 3: 2. Urban Investment Bonds: Negative Net Financing in H1, a Historical First - H1 2025 Supply: The supply of urban investment bonds shrank, with negative net financing for the first time in history. From January to June, the issuance was 2.9464 trillion yuan, a year - on - year decrease of 382.9 billion yuan, and the net financing was - 71.7 billion yuan, a year - on - year decrease of 218.5 billion yuan, mainly due to the tightening of bond - issuing policies [55] - Issuance Characteristics: The overall issuance sentiment was good, with a high proportion of over - subscribed issuances. The proportion of 3 - 5 - year issuances increased, while that of within - 1 - year issuances decreased. The issuance interest rates decreased overall, with greater declines in short - to medium - term bonds [55][56] - Regional Differences: The net financing performance of urban investment bonds varied by region. Most regions had negative net financing, mainly affected by district - level and park - level platforms. Guangdong and Shandong had relatively high positive net financing, while Jiangsu, Hunan, and Chongqing had large negative net financing [58] - Yield and Credit Spread: The yields of urban investment bonds generally decreased in H1, with high - grade long - duration and AA - low - grade bonds performing better. The credit spreads of all maturities and grades narrowed, with low - grade bonds performing more strongly [62][63] - Secondary Market: Since mid - March, the buying interest in the secondary market has been high, with a high proportion of TKN transactions and low - valuation transactions. There was a trend of increasing duration in transactions, and the proportion of AA(2) low - grade transactions remained high [66] Group 4: 3. Industrial Bonds: Supply Increase, Longer Durations in Both Primary and Secondary Markets - H1 2025 Supply: The issuance and net financing of industrial bonds increased year - on - year. From January to June, the issuance was 3.8718 trillion yuan, a year - on - year increase of 309.2 billion yuan, and the net financing was 1.0788 trillion yuan, a year - on - year increase of 40 billion yuan. The new regulations on science and technology innovation bonds contributed to the increase in issuance [18] Group 5: 4. Bank Capital Bonds: Low - Rated Bonds Perform Better, Weak Trading Sentiment - H1 2025 Performance: The yields of bank capital bonds showed differentiation, with short - duration and low - rated bonds performing better. The credit spreads of most varieties compressed, with 1 - 4Y small - and medium - bank capital bonds and 1 - 3Y AA - perpetual bonds having significant spread compression [44] - Trading Rhythm: The trading bandwidth of large - bank long - duration capital bonds has been narrowing, making band - trading more difficult. Reverse trading may be a better strategy. The 4 - year and 6 - year bonds have higher riding yields [48][51]