GuShiio.com Bond Market News
[Minister of Finance Lan Fo ‘an issued a document stating that arranging larger government bonds will provide more support for stabilizing growth and adjusting the structure]
Minister of Finance Lan Fo ‘an published an article “Implementing a More Proactive Fiscal Policy to Promote the Continued Recovery of the Economy”, explaining in detail the connotation of the central government’s previous deployment this year’s more proactive fiscal policy to continue to be stronger and more powerful. Lan Fo ‘an concluded that this year’s proactive fiscal policy will be reflected in five aspects, namely, increasing fiscal deficit ratio, increasing expenditure intensity, and accelerating expenditure progress; arranging larger-scale government bonds to provide more support for stabilizing growth and adjusting structure; Vigorously optimize the expenditure structure, strengthen precise investment, and pay more attention to benefiting people’s livelihood, promoting consumption, and increasing stamina; continue to make efforts to prevent and resolve risks in key areas, and promote smooth operation and sustainable development of finance; Further increase transfer payments to local governments, enhance local financial resources, and secure the bottom line of “three guarantees”.
[Increase investment within the central budget, ultra-long-term special treasury bonds, and local government special bonds to support the construction of major projects in the agricultural and rural fields]
The Central Committee of the Communist Party of China and the State Council issued opinions on further deepening rural reform and solidly promoting comprehensive rural revitalization. The opinion proposes to innovate the investment and financing mechanism for rural revitalization. Priority should be given to ensuring general public budget investment in the agricultural and rural sectors, and strengthening performance management incentives and constraints. Increase investment within the central budget, ultra-long-term special treasury bonds and local government special bonds to support the construction of major projects in the agricultural and rural fields. Use monetary policy tools such as reloans, rediscounts, and differentiated deposit reserve ratios to promote financial institutions to increase capital investment in rural revitalization. Support financial institutions to issue special financial bonds for “agriculture, rural areas and farmers”. Encourage qualified enterprises to issue rural revitalization bonds. We will further promote the construction of rural credit systems and strengthen the collection and sharing of agriculture-related credit information. Promote mortgage financing loans for live livestock and poultry, agricultural facilities, etc. Adhere to the positioning of small and medium-sized rural banks to support agriculture and small enterprises, accelerate the reform of rural credit cooperatives with “one province, one policy”, and promote the reform and reorganization of rural banks in a steady and orderly manner. Improve the multi-level agricultural insurance system and support the development of specialty agricultural product insurance. Strictly crack down on various illegal financial activities in rural areas. Strengthen the entire process of supervision of agriculture-related fund projects, and strive to rectify problems such as fraud, interception and misappropriation of funds benefiting farmers.
[Government financing guarantee institutions shall not provide credit enhancement for financing from local financing platforms]
In order to regulate the behavior of government financing guarantee institutions, the Ministry of Finance and other six departments issued the “Measures for the Development of Government Financing Guarantees” on February 21, which will come into effect on March 1. The “Measures” stipulate that government financing guarantee institutions shall not deviate from their main business and blindly expand their business scope, shall not provide guarantees for the issuance of government bonds, shall not provide credit enhancement for financing on local government financing platforms, and shall not make equity investment in non-financing guarantee institutions. National policies include the linkage model of scientific and technological innovation guarantees and equity investment institutions encouraged.
[This year’s economic growth is expected to be around 5%, and the CPI target is expected to be more rigid]
How to set expected development goals is the highlight of the annual National Two Sessions. During the two sessions, representatives and members will have heated discussions around relevant topics. Experts believe that focusing on the main expected goals of development, the economic growth rate for the whole year of 2025 may be set at around 5%, and the CPI growth target may be adjusted from 3% in the past years to 2%, but it should be more rigid. At the same time, the balance of payments is expected to remain basically balanced this year. As the level of cross-border investment and financing facilitation is further improved, the global capital revaluation of China’s technology in 2025 may lead more global capital to flow into China.
[This week, the central bank will have 1.5261 billion yuan of reverse repurchase due in the open market]
Data shows that 1.5261 billion yuan of reverse repos will expire in the central bank’s open market this week, of which 190.5 billion yuan, 489.2 billion yuan, 538.9 billion yuan, 125 billion yuan, and 182.5 billion yuan will expire respectively from Monday to Friday. In addition, a central bank bill swap of 3.87 billion yuan will expire next Friday.
[The short-term yield curve is upside down, and the issuance scale of banks ‘”second permanent bonds” has dropped by 80%, making transactions more difficult in the near future]
The inversion of the short-term yield curve of the bond market has also spread to banks ‘second permanent bonds. In the primary market, the size of second permanent bonds issued this year is only one-sixth of that of the same period last year. After the Spring Festival holiday, the adjustment of Eryong debt accelerated. Wind data shows that the yield on short-term bank capital bonds at all levels has exceeded the long-term, forming an upside down. Taking AA + level secondary capital bonds as an example, the six-month yield rose by about 18BP in February to 2.03%, exceeding the one-year 1.96%, three-year 1.93%, and even five-year 2.00%. Currently, the yield on 10-year AA + tier 2 capital bonds is only 2.07%. Industry analysts believe that the current short-term bank capital bonds are more cost-effective, but the recent volatility of the bond market has increased and the difficulty of trading the second permanent bond has increased. It is necessary to pay attention to the signal of loose funds.
[Another fine for asset securitization business was issued to securities firms for asset management. Many problems such as insufficient adjustment and insufficient collection of cash flow were exposed]
Since the beginning of the new year, the number of fines issued by securities firms for violating regulations in asset securitization business has increased, and currently three securities firms have been involved. The Shanghai Regulatory Bureau recently announced that Tianfeng Securities Asset Management Co., Ltd. was supervised and adopted administrative supervision measures to issue warning letters due to violations of regulations in engaging in asset securitization business. The fine originated from the asset securitization business. This business refers to the business activity of using the cash flow generated by the underlying assets as repayment support, carrying out credit enhancement through structuring and other methods, and issuing asset-backed securities on this basis. Since the beginning of the new year, three securities firms have violated relevant regulations on asset securitization business and have been subject to regulatory penalties. In addition to Tianfeng Securities Asset Management Co., Ltd., on February 14, Southwest Securities and Minsheng Securities had three violations respectively, and both securities firms violated the “Regulations on the Management of Asset Securitization Business of Subsidiaries of Securities Companies and Fund Management Companies” Article 13 stipulates that the subject of supervision will ultimately take measures to order corrections.
[Nearly 10 billion yuan of pooled asset management products have expired this year, and securities firms are under great pressure. Business linkage needs to be strengthened for transformation and breakthrough]
[Puli Pharmaceutical inflated profits by 695 million yuan, and its rating of “Puli Convertible Bonds” was downgraded to BBB-]
Recently, China Securities Pengyuan Credit Rating Co., Ltd.(hereinafter referred to as “China Securities Pengyuan”) issued an announcement to downgrade the credit rating of Puli Pharmaceutical (300630.SZ) and “Puli Convertible Bonds” from A to BBB-, and the rating outlook remains negative. China Securities Pengyuan said that this rating adjustment is mainly based on multiple pressures such as company information disclosure violations, declining profitability, and increased liquidity risks. According to the “Advance Notice of Administrative Punishment” issued by the China Securities Regulatory Commission received by the company on January 4, 2025, Puli Pharmaceuticals falsely increased operating income by a total of 1.031 billion yuan due to false records of financial data in 2021 and 2022, and the total inflated profits totaled 695 million yuan, accounting for 76.72% of the total disclosed profits in the two years. It has triggered major illegal and compulsory delisting as stipulated in the “Shenzhen Stock Exchange GEM Listing Rules for Shares. In addition, the company was investigated by the China Securities Regulatory Commission for failing to disclose its 2023 annual report on time, and the audit report was continuously issued with qualified opinions, further arousing market concerns about its financial transparency.
[It has risen 1.7% last week, and COMEX gold prices have once again reached record highs]
On February 20, the main intraday price of COMEX gold closed at US$2,973.4 per ounce, setting a new record high on February 11. Since then, the price of gold fluctuated at a high level. As of 11:30 noon on February 21, the price of COMEX gold fell back to approximately US$2948, an increase of 1.7% during the week. China Galaxy Securities Research News said that there are three main medium-term logics for the rise in gold prices: global gold ETF funds increased their holdings of gold under the Federal Reserve’s interest rate cuts, global central bank purchases under the influence of geopolitical conflicts, and credit devaluation hedging triggered by U.S. debt problems. Trading will continue to interpret and push gold prices up. Zhong Junxuan, a researcher at Minmetals Futures Co., Ltd., believes that the continued purchase of gold by global central banks has brought strong support to international gold prices. It is expected that the central bank will continue to increase its gold holdings in the future, which will provide support for the long-term upward trend of international gold prices. However, some institutions believe that there will still be many fluctuations in the gold price in the future. Although gold is often linked to value-preserving properties, its actual price fluctuates greatly as an investment product. Many industry insiders advise investors to pay attention to risks.
[Major shareholder provided 4.2 billion yuan in loan, Vanke received support from Shenzhen Railway Group]
On the evening of February 21, Vanke issued the “Announcement on Shenzhen Railway Group’s Provision of Shareholder Loans and Related Transactions to the Company.” The largest shareholder, Shenzhen Railway Group, plans to provide shareholder loans to Vanke with a loan amount of 4.2 billion yuan to be used by Vanke. Repay the company’s public debts due. The announcement shows that Shenzhen Railway Group’s loan to Vanke is the same as before, with a term of still three years, and the borrowing cost remains at a low interest rate of 2.34%, which is lower than the one-year loan market quoted interest rate (LPR) announced by the National Interbank Funding Center.) 76 basis points lower. It is reported that in terms of credit enhancement arrangements, the relevant loans are guaranteed by Vanke’s three wholly-owned subsidiaries, Shanghai Vanke Investment Management Co., Ltd., Shenzhen Vanke Development Co., Ltd. and Vanke Apartment Management Co., Ltd. In the next three months, Vanke will need to provide assets worth no more than 6 billion yuan for mortgage or pledge after obtaining review and approval at the shareholders ‘meeting, with a mortgage/pledge rate set at 70%, and at the same time cancel Shanghai Vanke Investment Management Co., Ltd., Shenzhen Vanke Development Co., Ltd. and Vanke Apartment Management Co., Ltd. guarantee arrangements.
[Exclusive| Does Jindi lift its debt crisis? The redemption of 1.7 billion yuan in bills was settled, leaving only 560 million yuan in public bonds due during the year]
With the payment of 1.7 billion yuan medium-term notes settled, Gemdale Group (600383.SH) may have passed the peak of debt repayment. A reporter from the Financial Union exclusively learned on February 21 that Gemdale Group had transferred 1.76086 billion yuan to the special account for medium-term notes redemption to repay the principal and interest of the “22 Gemdale MTN001” medium-term notes. It is reported that “22 Gold Land MTN001” will expire on February 23, with a principal amount of 1.7 billion yuan, a coupon rate of 3.58%, and an interest payable of 60.86 million yuan. “After the completion of this redemption, Gemdale Group has very little outstanding open market debt, which will further relieve liquidity pressure.” People familiar with the matter said. The above-mentioned person familiar with the matter said that after completing the redemption of this winning ticket, Jindi will become one of the few large-scale real estate companies that have basically completed public debt redemption and achieved safe landing. It is reported that Jindi has only two public bonds due this year, with a debt amount of 559 million yuan, of which the balance of “20 Jindi MTN001B” bonds is 500 million yuan and will mature on April 3; the balance of “20 Jindi 01” bonds is 59 million yuan and will mature on October 12 this year.
[Serious emotional conflict! U.S. consumers ‘long-term inflation expectations rise to new high since 1995]
Due to concerns about Trump’s policies, consumers ‘expectations for long-term inflation in the next 5-10 years were further revised upward to 3.5% in the final data from the February University of Michigan Consumer Inflation Survey released on Friday, the highest level since April 1995. At the same time, one-year inflation remained unadjusted and continued to surge to 4.3%. In February, the U.S. consumer confidence index fell to 64.7 from 71.7 in January, lower than analysts ‘expectations, and all five components that make up the index deteriorated. The S & P U.S. Business Activity Index, also released on Friday, also showed that the U.S. services and manufacturing composite index fell to 50.4 in February, its lowest level in nearly 17 months. Joanne Hsu, an economist at the University of Michigan and director of the Research Center, explained that higher inflation expectations may become self-fulfilling if consumers continue to increase spending to avoid expected sharp price increases.
[Japan’s core inflation rate hit a 19-month high in January! Hedge funds continue to bet on yen appreciation]
Japan released strong inflation data on Friday, with its core consumer inflation rate reaching 3.2% in January, the fastest growth rate in 19 months, further strengthening market expectations for the Bank of Japan to raise interest rates. Ryosuke Katagi, market economist at Mizuho Securities, said the Bank of Japan may believe that price conditions are moving in a consistent direction and may therefore raise interest rates. In addition, Japan’s economy’s GDP grew by 2.8% year-on-year in the quarter ending December last year, significantly ahead of market expectations and has pushed the market to raise interest rate hikes expectations. Most economists predict that the Bank of Japan will raise interest rates at least once this year, most likely to raise interest rates to 0.75% in the third quarter. This also pushed the market to buy yen. Traders said macro hedge funds continued to buy call options on the yen against a variety of currencies, including the dollar, euro and Swiss franc this week.
Open market:
In terms of the open market, the central bank announced that in order to maintain sufficient liquidity in the banking system, it launched a 182.5 billion yuan 7-day reverse repurchase operation on February 21 through fixed interest rates and quantity bidding, with an operating interest rate of 1.50%. Wind data showed that 98.5 billion yuan of reverse repurchase expired that day, with a net investment of 84 billion yuan in a single day.
Credit debt event
■ “H22 Xuhui 1” Holders ‘Meeting: The deadline for registration and voting is extended to February 26;
■ Convener: “24 Guanghui Automobile PPN001” failed to pay the principal and interest of the resale on schedule, and a holders meeting will be held on March 14;
■ Qingdao Port (06198.HK) plans to adjust the original reorganization plan and only acquire 100% equity of the oil company and 50% equity of Rizhao Shihua;
■ Yuzhou Group: The deadline for overseas debt restructuring has been extended to August 31;
■ Guangzhou R & F Real Estate: Six bonds including “H19 R & F 2” have been suspended since the market opened on February 24;
■ The issuance of “Zoomlion’s 2025 First Phase of Asset Supporting Notes for Supply and Chain Stability (Science and Technology Innovation Notes)” was cancelled;
■ Aerospace Hongtu Information Technology: The rating of the company’s main body and “Hongtu Convertible Bonds” has been downgraded from “A-” to “BBB+”;
■ Ganzhou Urban Development and Investment Group received a written warning from the Shanghai Stock Exchange.
Market dynamics:
[Money market| Most money market interest rates rose, with DR001 rising 0.39BP at 1.9499%]
Last Friday, money market interest rates mostly rose, among which the weighted average interest rate between banks and depositors pledged repo rose by 0.39BP at 1.9499% in the one-day period, by 15.34BP at 2.2156%, by 14-day period, by 9.11BP at 2.3363%, and by 8.57BP at 2.1346%.
Inter-bank repo fixing rates rose across the board. FDR001 rose 4.0 basis points to 1.99%; FDR007 rose 16.0 basis points to 2.26%; FDR014 rose 12.0 basis points to 2.35%.
Inter-bank repo fixing rates rose across the board. FR001 rose 20.0 basis points to 2.3%; FR007 rose 20.0 basis points to 2.35%; FR014 rose 10.0 basis points to 2.4%.
[Interest rate debt| Liquidity increased slightly, with net investment exceeding 80 billion yuan, and the main contract of 30-year treasury bond futures closed down nearly 1%]
Last Friday, treasury bond futures closed down across the board, with the 30-year main contract down 0.98%, the 10-year main contract down 0.27%, the 5-year main contract down 0.14%, and the 2-year main contract down 0.02%.
The yields of major inter-bank interest-rate bonds were mostly up. As of 16:30 pm, the yield of 10-year government bond active bonds 240011 rose by 1.5bp to 1.71%, the yield of 30-year government bond active bonds 2400006 rose by 1.25bp to 1.905%, and the yield of 10-year state-opened active bonds 240215 rose by 1.15bp to 1.724%.
Industry insiders told the Financial Union that the central bank’s net investment in open market operations that day was 84 billion yuan, combined with the large amount of financing from major banks in the afternoon, and the funding situation became loose in the afternoon. However, the volatility of safe-haven funds in the market has not eased, and the interbank deposit certificate interest rate is still rising. The 10-year treasury bond price was around 1.5bp and returned to around 1.71%.
[Credit debt| Most of the credit bonds weakened last Friday, and transactions throughout the day were less than 100 billion yuan]
Last Friday, most credit bonds weakened, and yields on medium and short-term bills of all maturities all rose, with less than 100 billion yuan traded throughout the day. Among them, 257 credit bonds rose, 106 credit bonds remained flat, and 1115 credit bonds fell.
Among the AAA short-term and medium-term notes, the 1-year yield rose by 4.17 basis points to 1.9717%; the 3-year yield rose by 4 basis points to 1.9838%; and the 5-year yield rose by 4.15 basis points to 2.0282%.
Among the AA+ medium and short-term notes, the 1-year yield rose by 4.08 basis points to 2.0608%; the 3-year yield rose by 4 basis points to 2.0788%; and the 5-year yield rose by 2.15 basis points to 2.1282%.
There were 4 credit bonds with an increase of more than 2%. Among them,”24 Luoyang Shengshi PPN001A”,”24 China Coal MTN001″ and “22 Xiamen Rail Green Bond 01” ranked among the top three, up 2.6%, 2.22%, and 2.15% respectively, with transactions of 20.5196 million yuan, 42.5175 million yuan, and 41.1413 million yuan respectively.
A total of 3 credit bonds with yields higher than 15% were traded, among which “23 Vanke MTN001″,”23 Vanke 01” and “22 Vanke 02” ranked among the top three, with yields of 19.72%, 17.68%, and 16.65%, respectively. The three bonds were traded at 16.841 million yuan, 497,500 yuan, and 27.8869 million yuan respectively.
A total of 10 credit bonds with yields in the range of 8%-15% were traded, of which “22 Wanke06″,”22 Wanke04” and “21 Wanke06” ranked among the top three, with yields of 10.15%, 10.09%, and 9.52%, respectively. The three bonds were traded for 2.8093 million yuan, 4.213 million yuan, and 1.3281 million yuan respectively.
[US bond market| US bond yields fell collectively, with 2-year US bond yields falling 7.19 basis points to 4.198%]
Last Friday, U.S. bond yields fell collectively. The two-year U.S. bond yield fell 7.19 basis points to 4.198%, the three-year U.S. bond yield fell 6.78 basis points to 4.2073%, and the five-year U.S. bond yield fell 7.28 basis points to 4.2707%, the 10-year U.S. bond yield fell 7.59 basis points to 4.4294%, and the 30-year U.S. bond yield fell 6.82 basis points to 4.6795%.
[European bond market| European bond yields generally fell, with British 10-year bond yields falling 3.7 basis points to 4.568%]
Last Friday, European bond yields generally fell. The British 10-year bond yield fell 3.7 basis points to 4.568%, the French 10-year bond yield fell 5.1 basis points to 3.212%, and the German 10-year bond yield fell 6.4 basis points to 2.470%. Italian 10-year bond yield.
