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Bond Market News
[China Securities Regulatory Commission: Increase multi-level bond market support for technological innovation]
On February 7, the China Securities Regulatory Commission issued the “Implementation Opinions on the” Five Major Articles “of Capital Markets to Do a Good Job in Finance”, which mentioned that the multi-level bond market should increase its support for technological innovation. Promote the high-quality development of scientific and technological innovation corporate bonds, optimize the issuance and registration process, encourage relevant institutions to provide credit enhancement support for technology-based enterprises to issue bonds in accordance with the principles of marketization and legalization, and explore and develop more science and technology-themed bonds. Incorporate high-quality enterprise science and technology innovation bonds into benchmark market-making varieties, and increase policy support for the exchange’s pledged repo discount coefficient. Explore intellectual property asset securitization business. Support the issuance of real estate investment trusts (REITs) for projects in new infrastructure such as artificial intelligence, data centers, and smart cities, as well as science and technology innovation industrial parks, promote the revitalization of existing assets, and support the digital transformation of traditional infrastructure.
Enrich green financial products in the capital market. Support qualified green industry enterprises in issuing and listing, financing mergers and acquisitions, and issuing green bonds, green asset-backed securities, etc. Further improve the convenience of green bond application, acceptance, review and registration; actively develop rural revitalization corporate bonds, further improve the convenience of review and registration, and support enterprises to issue bonds for modern rural industries, integrated development of rural industries and other fields.
[The China Securities Index will release indexes such as the China Securities and High-Grade Private Enterprise Credit Bond Index]
On February 10, 2025, China Securities Index Co., Ltd. will officially release the China Securities Medium and High-Grade Private Enterprise Credit Bond Index Series, the China Securities Partial Stock Style Fund Index Series and the China Securities Pension Target Fund Index to provide diversified investment targets and performance benchmarks for the market.
[The issuance of replacement bonds has accelerated in the Year of the Snake, with nearly 210 billion yuan of new issuance in a week. The effect of “loosening and reducing burdens” is gradually emerging]
After returning from the Spring Festival holiday, the issuance of special bonds for refinancing to replace hidden bonds quickly started, and nearly 210 billion yuan of replacement bonds will be issued in the past week. As of the latest, 378.056 billion yuan of special refinancing bonds of 2 trillion yuan used to replace hidden bonds have been issued or are planned to be issued this year. Among them, Zhejiang, Shaanxi, Shanxi, Ningxia, Xiamen, and Beijing have used up this year. The effect of the hidden debt replacement policy of “relaxing and reducing burdens” has gradually emerged.
[The difficulty of allocation has escalated. The net supply of Eryong’s debt this year may be weak overall, and the maturity scale is expected to reach approximately 1.2 trillion yuan]
Data shows that the maturity scale of the “Second Eternal Debt” in 2025 is expected to reach approximately 1.2 trillion yuan, exceeding the redemption scale for the whole year of 2024 by 1.11 trillion yuan. In terms of institutions, state-owned banks, joint-stock banks, urban commercial banks and The scale of the “Second Eternal Debt” due by rural commercial banks is approximately 615 billion yuan, 397 billion yuan, 170.8 billion yuan and 32.3 billion yuan respectively. Among them, the earliest person to face redemption of the Second Yong Bond this year is the 30 billion yuan “20 Ping An Bank Perpetual Bond 01” from Ping An Bank, which will face redemption on February 25, with a coupon rate of 3.85%. It is worth noting that at the beginning of this year, the Ministry of Finance has made it clear that it will issue special treasury bonds to support large commercial banks to replenish capital and issue local special bonds to replenish capital of small and medium-sized banks. Many analysts pointed out that this year, the Second Yongzheng Debt may be redeemed. The method of post-replacement issuance reduces the coupon rate and reduces financing costs. For institutions that allocate Second Yongzheng Debt, they may face a larger “asset shortage” pattern than last year, and insurance institutions have taken the lead in taking action in recent years.
[The yields of certificates of deposit and government bonds continue to be inverted. Under the pre-issuance of replacement bonds, the funding gap in February may reach 700 billion yuan]
In the last week before the festival, the yield on the one-year certificates of deposit of China Stock Exchange was around 1.75%. With relatively tight funds, the certificates of deposit market was in a state of “weak supply and demand”. The relatively weaker rhythm on the supply side drove the deposit of deposit interest rates along the way, and the degree of inversion with the yield of 10-year government bonds deepened. According to agency estimates, the net financing scale of government bonds in February may be around 1.8 trillion yuan, a monthly high level in previous years, and the liquidity gap may be around 700 billion yuan, more than about 1.7 trillion yuan compared with the same period in 2024. Attention should be paid to the central bank’s hedging options. The impact on liquidity. Many industry insiders pointed out that although the pre-issuance of replacement bonds in February posed certain constraints on liquidity, from the perspective of current price comparison, the cost performance of deposit receipt allocation is still relatively large.
[The China Securities Convertible Bond Index hits a new high. The valuation of convertible bonds is still expected to receive continued support]
On February 7, the CSI Convertible Bond Index hit a new high, which not only demonstrated the strong recovery of the convertible bond market, but also further highlighted the resilience of convertible bonds as an investment tool with both debt and equity properties. Data shows that since September 24, 2024, as of the close of February 7, 2025, driven by multiple positive factors, the CSI Convertible Bond Index has shown a significant recovery trend, with a cumulative increase of more than 17%. Huang Weiping, chief analyst of Shenwan Hongyuan Bonds, said in an interview that the valuation of convertible bonds is still expected to continue to be supported under the expectation of shrinking supply and increasing demand and no significant downward trend in equity. As the market repair continues, although the price/performance ratio of convertible bonds has declined, its unique dual nature of equity and debt makes it still have certain allocation value in market fluctuations.
[Ningxia plans to issue 13.8 billion yuan of refinancing special bonds to replace existing hidden debts]
The Department of Finance of Ningxia Hui Autonomous Region plans to issue the 2025 Ningxia Hui Autonomous Region government refinancing special bonds (first to second phases) through tender on February 13, 2025, with a total issue of 13.8 billion yuan. The funds raised are used to replace existing hidden debts.
[Zhejiang Province has been issued in advance a new local government debt limit of 213 billion yuan in 2025]
The report on the implementation of provincial and provincial budgets in 2024 and the draft provincial and provincial budgets for 2025 disclosed by the Zhejiang Province Department of Finance shows that at the end of 2024, the Ministry of Finance issued a new local government debt limit of 213 billion yuan in Zhejiang Province in advance. In view of the fact that only some new local government debt limits have been issued in 2025, Zhejiang Province’s 2025 local government debt limit is temporarily set at the 2024 limit of 2946.175 billion yuan, plus the advance release of some new local government debt limits in 2025, which is expected to be 3159.175 billion yuan. The new local government debt limit of 213 billion yuan issued in advance has been included in the 2025 budget for the construction of qualified public welfare projects. After the new local government debt limit for the whole year of 2025 is issued by the Ministry of Finance, a budget adjustment plan (draft) will be prepared in accordance with the law and submitted to the Standing Committee of the Provincial People’s Congress for approval.
[Shandong Province: Deepen the transformation and reform of financing platforms and urban investment companies and divest government financing functions]
According to the official website of the Shandong Province Government, Shandong Province recently held a conference on reform and innovation to promote high-quality development. Lin Wu, Secretary of the Shandong Provincial Party Committee, attended the meeting and delivered a speech. Lin Wu pointed out that we should deepen the transformation and reform of financing platforms and urban investment companies, divest government financing functions, promote market-oriented operations in categories, and deepen the reform of internal management of enterprises.
[Federal Reserve’s Monetary Policy Report: Plan to Stop Reducing the Balance Sheet at the Right Time]
The Federal Reserve released its semi-annual monetary policy report, which mentioned that the Federal Reserve continues to significantly reduce its holdings of U.S. Treasury bonds and agency securities in a predictable manner. Since June 2024, the Federal Reserve has reduced its securities holdings by US$297 billion, and securities holdings have dropped by approximately US$2 trillion since the beginning of the balance sheet contraction. The Federal Open Market Committee (FOMC) said it intends to maintain securities holdings at levels consistent with the efficient implementation of monetary policy under an adequate reserve regime. To ensure a smooth transition, the FOMC slowed the decline in securities holdings in June 2024 and intends to stop reducing its holdings of securities when reserve balances are slightly above levels it believes are consistent with sufficient reserves.
[The Bank of India cuts interest rates for the first time in nearly five years]
On February 7, the Reserve Bank of India announced that it would cut the repo rate on loans to commercial banks by 25 basis points to 6.25%, its first rate cut since May 2020. Sanjay Malhotra, governor of the Reserve Bank of India, said when he took office as central bank governor in December last year that easing monetary policy was more appropriate given current growth and inflation dynamics.
open market：
In terms of the open market, the central bank announced that in order to maintain sufficient liquidity in the banking system, on February 7, a 183.7 billion yuan 7-day reverse repurchase operation was launched through fixed interest rate and quantity bidding, with an operating interest rate of 1.50%. Wind data showed that 284 billion yuan of reverse repos were due on the same day. Based on this calculation, a net withdrawal in a single day was 100.3 billion yuan, which was a net withdrawal for three consecutive days.
Credit debt event
■ Kaisa Group: It plans to hold a meeting related to overseas debt restructuring on February 28;
■24 Guanghui Automobile PPN001: Failure to repay the principal and interest of the resale bonds on February 7, 2025;
■ Chaoda Convertible Bonds: Decided not to redeem in advance, and will not exercise its rights if the redemption clause is triggered again in the next three months;
■ China Securities Pengyuan: Downgraded the credit rating of China National Equipment Construction Corporation to B+, and the rating outlook remains stable;
■ Beijing Enterprises Water Group: “22 Beijing Enterprises Water Collection MTN001A” is scheduled to be paid in advance on February 13;
■ Shenzhen Expressway: The application for issuing renewable corporate bonds of no more than 4 billion yuan was approved by the China Securities Regulatory Commission for registration;
■23 Shaoyang Urban Investment Corporation MTN001: The coupon rate is lowered by 490BP to 1.00%;
■ Zhuzhou Yunlong Development Investment Holdings: It plans to reduce the coupon rate of “23 Yunlong 02” by 320 basis points to 2.80%;
■22 Ren micro bonds: The coupon rate was lowered by 269 basis points to 3.10%.
market dynamics：
[Money market| Money market interest rates mostly rise]
On Friday, most money market interest rates fell. Among them, the weighted average interest rate of bank-deposit pledged repo for the one-day period rose by 0.21 BP to 1.8033%, the seven-day period fell by 4.86 BP to 1.7629%, the 14-day period fell by 7.2 BP to 1.7595%, and the one-month period fell by 10.29 BP to 1.7955%. The overnight repo rate for deposits remained high and inverted for the seven-day period.
Most of the short-end varieties of Shibor are down. Overnight varieties rose by 2.4BP at 1.816%;7-day period fell by 5.3BP at 1.732%;14-day period fell by 6.1BP at 1.793%;1-month period fell by 0.3BP at 1.705%.
Most of the repurchase fixing rates in the interbank market fell, with FDR001 reporting 1.8300%, up 2.00 basis points from the previous day; FDR007 reporting 1.7500%, down 5.00 basis points from the previous day; FDR014 reporting 1.7500%, down 9.09 basis points from the previous day.
The interbank market repurchase fixing rate fell across the board, with FR001 reporting 1.8300%, down 5.00 basis points from the previous day; FR007 reporting 1.8000%, down 5.00 basis points from the previous day; FR014 reporting 1.8200%, down 8.00 basis points from the previous day.
[Interest rate debt| After the holiday, the central bank’s net withdrawal has exceeded one trillion yuan, and the yields of active bonds on government bonds have risen across the board]
On Friday, treasury bond futures closed down across the board, with the 30-year main contract down 0.2%, the 10-year and 2-year main contract down 0.11%, and the 5-year main contract down 0.15%.
The yields of major inter-bank interest-rate bonds were mostly up. As of 16:30 pm, the yield of 10-year treasury bond active bonds 240011 was up 0.6bp to 1.601%, the yield of 30-year treasury bond active bonds 2400006 was up 1.5bp to 1.824%, and the yield of 10-year state-opened active bonds 240215 was up 1.2bp to 1.638%.
Industry insiders pointed out to the Financial Union that the bond market was in a good mood in early trading, with the 10-year government bond interest rate briefly hitting 1.595%. At around 10 a.m., funds were tight, buying power weakened, and the equity market strengthened. In the afternoon, funds turned to sell. The 30-year treasury bond interest rate returned to around 1.83%. After the main contract of treasury bond futures TL turned green, the intraday decline reached 0.22%.
[European bond market| European bond yields closed mixed, with British 10-year bond yields falling 0.9 basis points to 4.475%]
On Friday, European bond yields closed mixed, with British 10-year bond yields down 0.9 basis points to 4.475%, French 10-year bond yields up 0.3 basis points to 3.090%, German 10-year bond yields down 0.7 basis points to 2.368%, Italian 10-year bond yields up 2.1 basis points to 3.465%, and Spanish 10-year bond yields up 1.1 basis points to 2.996%.
[US bond market| US bond yields rose collectively, with 2-year US bond yields rising 8.16 basis points to 4.2892%]
On Friday, U.S. bond yields rose collectively. The two-year U.S. bond yield rose 8.16 basis points to 4.2892%, the three-year U.S. bond yield rose 8.59 basis points to 4.315%, and the five-year U.S. bond yield rose 7.23 basis points to 4.3432%, the 10-year U.S. bond yield rose 6.05 basis points to 4.4927%, and the 30-year U.S. bond yield rose 5.28 basis points to 4.6906%.
