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Bond Market News
[Political Bureau of the CPC Central Committee: Implement more proactive macro policies, expand domestic demand, promote the integrated development of scientific and technological innovation and industrial innovation, and stabilize the property market and stock market]
The Political Bureau of the CPC Central Committee held a meeting on February 28 to discuss the draft “Government Work Report” that the State Council plans to submit to the Third Session of the 14th National People’s Congress for review. Xi Jinping, General Secretary of the CPC Central Committee, presided over the meeting. The meeting emphasized that this year is the year when the “14th Five-Year Plan” comes to an end. To do a good job in government work, we must under the strong leadership of the Party Central Committee with Comrade Xi Jinping as the core and guided by Xi Jinping Thought on Socialism with China Characteristics for a New Era, fully implement the spirit of the 20th National Congress of the Communist Party of China and the Second and Third Plenary Sessions of the 20th Central Committee of the Communist Party of China, adhere to the general tone of the work of seeking progress while maintaining stability, fully, accurately and comprehensively implement the new development concept, and accelerate the construction of a new development pattern. Solidly promote high-quality development, further comprehensively deepen reforms, expand high-level opening up to the outside world, build a modern industrial system, better coordinate development and security, implement more proactive macro policies, expand domestic demand, and promote the integrated development of scientific and technological innovation and industrial innovation. Stabilize the property market and stock market, prevent and resolve risks and external shocks in key areas, stabilize expectations, stimulate vitality, promote the continued recovery of the economy, and continuously improve people’s living standards. Maintain social harmony and stability, complete the goals and tasks of the “14th Five-Year Plan” with high quality, and lay a solid foundation for achieving a good start to the “15th Five-Year Plan”.
[Five departments including the central bank: Support private enterprises to grow and grow through the capital market]
The People’s Bank of China, the All-China Federation of Industry and Commerce, the State Administration of Financial Supervision, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange jointly held a symposium on financial support for the high-quality development of private enterprises on February 28. At the symposium, the heads of five private enterprises including Yiwen Group and Geely Holdings and the All-China Mergers and Acquisitions Association introduced the business situation of the enterprises and put forward opinions and suggestions. Leaders of four financial institutions including Industrial and Commercial Bank of China and People’s Insurance Group and Shanghai Stock Exchange exchanged experiences. The meeting required that we should implement moderately loose monetary policy, give full play to the role of structural monetary policy tools, strengthen regulatory guidance, guide financial institutions to treat enterprises of all types of ownership “equally”, and increase credit to private, small and micro enterprises. Implement 25 financial measures to support the private economy, improve the credit enhancement system for private small and medium-sized enterprises, and accelerate the issuance of policy documents regulating Supply Chain Finance business. Strengthen the institutional construction and product innovation of the bond market, and continue to play the leading role of the “second arrow”. We will do a good job in implementing policies such as “Eight Principles for Science and Technology Innovation Board”,”Sixteen Principles for Serving the Modern Industrial System” and “Six Principles for Mergers and Acquisitions” to support the development and growth of private enterprises through the capital market. Financial institutions should strengthen the building of financial service capabilities, further unblock diversified financing channels such as stocks, bonds, and loans for private enterprises, increase investment in various financial resource elements, and make financial services for private enterprises practical, in-depth and refined.
[The issuance scale in the two months before the full launch of local bond issuance increased significantly compared with the same period last year]
The issuance of local bonds welcomed a “good start”. Data shows that in the first two months of this year, a total of 1.863296 billion yuan of local bonds were issued across the country, a new high in the past three years (944.411 billion yuan in the same period in 2024 and 1.219.631 billion yuan in 2023), a significant increase of more than 97% compared with the same period last year. “Since the beginning of this year, thanks to the pilot ‘self-review and self-issuance’ of special bond projects to improve issuance efficiency, and local governments to accelerate the replacement of existing hidden debts, the issuance of local bonds, especially new special bonds and refinancing special bonds, has accelerated significantly.” Wen Bin, chief economist of Minsheng Bank, said that this will help expand effective investment and reduce local fiscal pressure.
[Yuan Duoran, Deputy General Manager of Shanghai Stock Exchange: Promote the expansion and classification of ABS market, promote the initial issuance of REITs and regular issuance of expanded fundraising]
Yuan Duoran, deputy general manager of the Shanghai Stock Exchange, said that we should strengthen the function of the bond market and increase support for bond financing of private enterprises. Support industrial enterprises to issue key products such as small, medium and micro enterprise support bonds and high-growth industrial bonds, steadily expand the scale of innovative products such as science and technology innovation that serve the national strategy, meet the capital needs of enterprises in key areas, promote the expansion and classification of the ABS market, and promote regular issuance of REITs. Actively support private enterprises in solving development problems and continue to promote the recovery of the private economy. Help solve the problem of recovering accounts receivable by private enterprises and continue to improve the cash flow situation. Coordinate financing support for real estate enterprises and bond default risk prevention and control, and steadily reduce the bond stock of private real estate enterprises.
[Central Bank: In February, it launched a 1.4 trillion yuan buyout reverse repurchase operation but did not carry out open market treasury bond trading operations]
The central bank issued an announcement on February 28 that in order to maintain sufficient liquidity in the banking system, the People’s Bank of China launched a 1.4 trillion yuan buyout reverse repurchase operation in February 2025 through fixed quantity, interest rate bidding, and multiple price bids. In February 2025, the People’s Bank of China did not conduct open market treasury bond trading operations.
The central bank released the operation of the financial market in January 2025 on the same day. In January, the bond market issued a total of 5.102.75 billion yuan in various bonds. National debt issuance was 1,018.50 billion yuan, local government bonds were 557.57 billion yuan, financial bonds were 704.21 billion yuan, corporate credit bonds 1 were issued 1,279.17 billion yuan, credit asset-backed securities were issued 2.73 billion yuan, and interbank certificates of deposit were issued 1,514.78 billion yuan. As of the end of January, the bond market custody balance was 178.2 trillion yuan. Among them, the inter-bank market custody balance was 156.9 trillion yuan, and the exchange market custody balance was 21.3 trillion yuan. In terms of types of bonds, the custody balance of treasury bonds is 34.1 trillion yuan, the custody balance of local government bonds is 47.8 trillion yuan, the custody balance of financial bonds is 41.1 trillion yuan, the custody balance of corporate credit bonds is 33.3 trillion yuan, and the custody balance of credit asset-backed securities is 1.1 trillion yuan, and the custody balance of interbank certificates of deposit is 19.6 trillion yuan. The balance of over-the-counter bond custody of commercial banks was 147.44 billion yuan.
[National Bureau of Statistics: The manufacturing purchasing managers ‘index (PMI) in February was 50.2%, up 1.1 percentage points from the previous month]
Data from the National Bureau of Statistics on March 1 showed that in February, the manufacturing purchasing managers index (PMI) was 50.2%, an increase of 1.1 percentage points from the previous month, and the manufacturing boom level rebounded significantly. In terms of enterprise size, the PMI of large enterprises was 52.5%, an increase of 2.6 percentage points from the previous month and above the critical point; the PMI of small and medium enterprises was 49.2% and 46.3%, respectively, down 0.3 and 0.2 percentage points from the previous month, both below the critical point.
[Association of Dealers: Strengthen anti-money laundering self-discipline management in the inter-bank bond market]
On February 28, China Association of Interbank Market Dealers issued a notice. Recently, during the investigation and handling of violations in the inter-bank bond market, the Association of Dealers found that a large number of violations of laws and regulations in the inter-bank bond market were intertwined with anti-money laundering violations. Under the guidance of the anti-money laundering administrative department, the Association of Dealers will strengthen anti-money laundering self-discipline management of the inter-bank bond market, including but not limited to: First, participating in the formulation of the anti-money laundering system for the inter-bank bond market by the anti-money laundering administrative department. Second, based on the business attributes and risk characteristics of the inter-bank bond market, relevant anti-money laundering self-discipline work guidelines will be issued in a timely manner. The third is to carry out targeted anti-money laundering training and member exchanges based on the characteristics of the inter-bank bond market to improve market members ‘anti-money laundering awareness and risk awareness. The fourth is to self-discipline manage the performance of anti-money laundering obligations of market members during the inter-bank bond market exhibition, and promptly warn of risks. Fifth, if suspected violations of anti-money laundering laws, regulations and self-discipline management regulations are discovered during self-discipline management, the report shall be promptly transferred to the anti-money laundering administrative department, and “one case double investigation” shall be carried out on relevant cases.
[Increased volatility in the bond market puts higher requirements on trading capabilities]
Since the beginning of this year, the bond market has fluctuated greatly. The 60-day historical volatility of 10-year treasury bonds has reached a high since April 2020. Treasury bond futures staged a “V”-shaped reversal on February 25. There are obvious differences in judgment between the long and short sides, and trading ability becomes the key. In this regard, market participants suggest adopting a dumbbell investment strategy to cope with the current market environment by complementing the stability of short-term bonds and the high-yield of long-term bonds.
[Financial management scale dropped by 390 billion yuan at the end of the month]
Huaxi Solid Income Research reported that last week (February 24-28), the scale of financial management fell by 394.1 billion yuan month-on-month to 30.37 trillion yuan, a decrease that exceeded the same period in previous years. Financial management funds usually flow back at the end of the month. The scale of financial management has dropped in the last week of February since 2022, mostly in the range of 120 – 190 billion. However, recent financial management may be affected by debt redemption pressure, resulting in increased reflux pressure. As of February 28, the retracements of representative short-term debt and medium and long-term debt financial management products reached 0.08% and 0.03% respectively, which is close to the small redemption wave in September 2023 (the largest retracements of short-term debt and medium and long-term debt financial management products are 0.09%, 0.03% respectively).
[Debt-based issuance fell to a two-year low. In February, nearly 90% of the net debt-based net worth retreated, down by up to 4%]
Based on the subscription start date, a total of 15 bond funds were issued in February, with a total share of 20.754 billion, a monthly low in the past two years. In addition, debt-based funds have been the main force of public fund issuance in recent years, with monthly issuance shares usually accounting for more than 50%, and more often than 90%. In February, debt-based issuance accounted for 41.70%, only more than in October last year and a low level in recent years. In February, among the more than 4300 pure debt bases (calculated separately), only about 600 had positive net growth. Among them, the net value of Xingyin Hefeng Bond E fell by 4.21%, Manulife Trading’s three-month fixed-open bond launch C, Dongwu Tianrui’s three-month fixed-open bond A/C, Ping An Huixu Pure Bond A/C, and Hui ‘an Jiaxin Pure Bond Fund also fell by more than 2%. Judging from the 2024 quarterly report of Xingyin Hefeng Bonds, it has a heavy position in state-owned bonds. Industry insiders believe that the net value of the debt base has a strong ability to “fill holes” and remains the “ballast stone” in asset allocation.
[323 funds suspended large-scale subscriptions of bond funds, accounting for more than 50%]
According to statistics, as of March 1, a total of 370 funds have issued announcements to suspend large-scale subscriptions, involving 323 funds. There is complex market logic behind this phenomenon, which not only reflects the strategic adjustments of fund companies, but also has a profound impact on investors ‘decisions and the overall operation of the market. In terms of investment types, there are many and diverse types of funds that restrict large-scale subscriptions, including bond funds, money market funds, hybrid funds, equity funds, QDII funds and FOF. Among the above 323 funds, bond funds account for the highest proportion, exceeding 50%. Such funds are sensitive to changes in interest rates. When market interest rates are unstable, restricting large-scale subscriptions can avoid the influx of large amounts of funds to disrupt portfolio allocation and maintain stable returns. Money market funds, hybrid funds, and equity funds all account for more than 10%, and QDII funds account for less than 10%. FOF accounts for the lowest proportion, less than 1%. This shows that funds with different investment strategies and risk characteristics may take measures to restrict large-scale subscriptions for their own reasons.
[Bank convertible bonds accelerate clearing, and at least 4 bank convertible bonds will be delisted this year]
Bank convertible bonds have entered an accelerated clearing stage. Following the triggering of forced redemption conditions for Chengdu Bank of China’s convertible bonds and Suzhou Bank’s convertible bonds, another bank convertible bonds will withdraw from the convertible bond market this year. CITIC Bank recently issued an announcement stating that the bank’s 40 billion yuan convertible bonds officially listed and traded on the Shanghai Stock Exchange on March 19, 2019 are referred to as “CITIC Convertible Bonds” and the bond code is “113021”. According to the announcement, the principal and interest amount due for “CITIC Convertible Bonds” is RMB 111 (including tax) per piece, and the redemption funds will be released on March 4, 2025. In addition, Pudong Development Bank’s convertible bonds will also expire in October this year. At least four banks will be delisted on convertible bonds this year, and bank convertible bonds will be significantly reduced.
[Gansu Province: Issue bonds to resolve existing debt in 2024, saving interest expenses of approximately 3 billion yuan, effectively solving the 2.2-fold debt “problem]
The Gansu Province Department of Finance published an article in “China Finance” stating that in 2024, bonds will be issued to resolve existing debt, saving about 3 billion yuan in interest expenses, effectively solving the 2.2-fold debt “problem, and giving full play to the comprehensive effect of” using more money “and” more birds with one stone “replacement bond funds.
[Jiangsu Province will tender for issuance of 51.1 billion yuan of special refinancing bonds on March 7 to replace existing hidden debts]
On March 7, Jiangsu Province will tender for the issuance of 51.1 billion yuan of special refinancing bonds to replace existing hidden debt. In addition, 10 billion yuan in 10-year “special” new special bonds will be issued through tenders to raise funds for 56 projects such as shantytown renovation. The “two books in one case” have not been disclosed.
[The U.S. core PCE price index in January increased by 2.6% year-on-year in line with expectations]
The core PCE price index in the United States increased by 2.6% year-on-year in January, with an expected growth of 2.6%. The previous value was revised from 2.8% to 2.9%. The core PCE price index in the United States increased by 0.3% month-on-month in January, in line with expectations and hitting a new high since October 2024.
[Japanese regulators will rectify the US$67 billion high-yield loan market backed by Japanese government bonds]
Japan’s financial regulator plans to overhaul the high-yield loan market backed by government bonds and other assets. Officials have warned of the risks of such loans before in the $67 billion market, but are still sought after by regional banks. The Financial Services Agency of Japan will review banks that have increased their holdings of Japanese government bonds in the past year and repackaged them into loans, Toshinori Yashiki, director of the agency’s Bureau of Strategic Development and Management, said in an interview on Thursday. He also mentioned that securities firms that actively peddle these products to banks would also be targeted by regulators. The FSA of Japan stepped up enforcement efforts after noting that some regional banks had bought more such products despite warnings from regulators in January last year. Officials are also concerned that some banks lack proper risk management for opaque products and may suffer losses if market interest rates move unfavorably.
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 284.5 billion yuan 7-day reverse repurchase operation on February 28 through fixed interest rates and quantity bidding, with an operating interest rate of 1.5%. Wind data shows that 182.5 billion yuan of reverse repurchase was due that day. Based on this calculation, a net investment in a single day was 102 billion yuan.
Data shows that 1.6592 billion yuan of reverse repos will expire in the central bank’s open market this week, of which 292.5 billion yuan, 318.5 billion yuan, 548.7 billion yuan, 215 billion yuan, and 284.5 billion yuan will expire respectively from Monday to Friday.
Credit debt event
■ Public selection of managers for the bankruptcy reorganization cases of five companies including Chongqing Caixin Group;
■ Oceanwide Holdings: Beijing Second Intermediate People’s Court will judicial auction the 51% stake in Asia-Pacific Property Insurance held by Wuhan Company;
■ Sunac China: Applied to the High Court for a share transfer authorization order in response to the liquidation petition, which was approved on February 28, 2025;
■ Ocean Capital: “H20 Yuan Capital 1” should pay 1% of the principal on March 9, with a 90-day grace period;
■ Guolian Minsheng Securities: It plans to issue corporate bonds of no more than 1.5 billion yuan to raise funds to replace the self-raised funds that have been repaid the principal of the corporate bonds;
■ Baolong Real Estate’s overseas debt restructuring plan has expired. Industry insiders: or launch a restructuring plan with greater debt reduction;
■ Vanke: “22Vanke 01″ is scheduled to pay the principal and interest on March 4, with a scale of 890 million yuan and a coupon rate of 3.14%.”22Vanke 02” will pay interest on the same day, with a scale of 1.1 billion yuan and a coupon rate of 3.64%;
■19 Shenzhen Bond 09: The early redemption option will not be exercised. The total issuance amount of this period will be 200 million yuan, and the interest rate on the unredeemed portion will be 3.37%;
■23 Longevity Investment MTN001: Interest rate will be lowered by 550BP to 1%, and the resale application period will be from March 4, 2025 to March 10, 2025;
■ Xinhua Insurance: It plans to issue no more than 10 billion yuan of domestic unfixed-term capital bonds;
■ The upper limit of the bookkeeping and filing subscription range of “25 Fuhe Construction MTN001” has been raised from 2.6% to 2.8%;
■ Ningbo Zhenhai Agricultural Commercial Bank: It plans to fully redeem the “20 Zhenhai Agricultural Commercial Bank Level 2” on March 30;
■ Prosperity China: “22GLP01” is scheduled to pay the principal and interest and delist on March 7;
■ Postal Group: In view of the recent large market fluctuations, the issuance of “25 Post MTN003” was cancelled.
market dynamics：
[Money market| Money market interest rates mostly fell]
Last Friday, money market interest rates mostly fell, among which the weighted average interest rate between banks and depositors fell by 3.42 BP at 1.8552%, the 7-day decline was 20.2 BP at 2.1262%, and the 14-day decline was 3.42 BP at 2.2825%.
Most of the short-end varieties of Shibor are down. Overnight varieties fell by 0.2 BP at 1.865%;7-day period fell by 14.7 BP at 2.093%;14-day period fell by 8.6 BP at 2.273%;1-month period rose by 2.1 BP at 1.868%, setting a new high since July 2024.
Interbank repo fixing rates fell collectively. FR001 reported 2.0500%, down 5.00 basis points; FR007 reported 2.2000%, down 25.00 basis points; FR014 reported 2.3000%, down 5.00 basis points.
The interbank repurchase fixing interest rate fell collectively. FDR001 reported 1.8639%, down 2.61 basis points; FDR007 reported 2.1196%, down 23.04 basis points; FDR014 reported 2.3000%, down 5.00 basis points.
[Interest rate debt| The seesaw effect of stocks and bonds is obvious, and all medium and long-end active bonds of national debt have turned red]
Last Friday, treasury bond futures closed up across the board, with the 30-year main contract rising 0.54%, the 10-year main contract rising 0.2%, the 5-year main contract rising 0.12%, and the 2-year main contract rising 0.05%.
Yields on major inter-bank interest-rate bonds turned red across the board. As of 16:30 Beijing time, the yield of 10-year treasury bond active bonds 240011 was reported at 1.723%, the yield of 30-year treasury bond active bonds 2400006 was reported at 1.91%, and the yield of 10-year state-issued active bonds 240215 was reported at 1.77%.
Industry insiders told Financial Union that treasury bonds futures in early trading made up for the rise in spot bonds yesterday afternoon, and TL’s main contract fell slightly to around 0.2%. The central bank increased its net investment efforts, and the interbank repo rate dropped significantly that day, but non-bank liquidity remained expensive. The 10-year treasury bond fluctuated near yesterday’s closing price in the morning. In the afternoon, it was boosted by the decline in the equity market. Both treasury bond futures and spot bonds were repaired, and the 10-year treasury bond interest rate returned to around 1.725%.
[Credit debt| Most of the credit bonds weakened, with less than 100 billion yuan traded throughout the day]
Last Friday, most credit bonds weakened. The yields of medium and short-term bills of China Bond of various maturities rose compared with the previous day. The credit spread widened compared with the previous day. The transaction volume throughout the day was less than 100 billion yuan. Among AAA-grade medium and short-term notes, the 1-year yield rose by 1.57 basis points to 2.081%. Among AA-grade medium and short-term notes, the 1-year yield rose by 0.57 basis points to 2.221%;
There were 3 credit bonds with an increase of more than 2%. Among them,”23 Xintai 02″,”22 Wanke 06″ and “23 Wanke 01” ranked among the top three, up 9.59%, 4.38%, and 2.98% respectively, with transactions of 1.108 million yuan, 2.89 million yuan, and 1.038 million yuan respectively.
Credit bonds repaid in advance by multiple bonds fell by more than 2%. In addition,”24 Wenlan 02″,”23 Lianyun Urban Construction PPN001″ and “25 Zhenjiang Industrial Investment MTN002” fell among the top three, down 1.79%, 1.77%, and 1.63% respectively, with transactions of 50.8475 million yuan, 10.2436 million yuan, and 9.8375 million yuan respectively.
High-yield bonds: No credit bonds with a yield higher than 15% were traded on that day. Among them, the yields of “23Wanke01″,”22Wanke02” and “22Wanke04” ranked among the top three, with 14.37%, 13.82%, and 8.82%, respectively. The three bonds were traded at 1.038 million yuan, 8.9719 million yuan, and 16.5674 million yuan respectively. A total of 6 credit bonds with yields in the range of 8%-15% were traded, of which “23 Wanke01″,”22 Wanke02” and “22 Wanke04” were among the top three, with yields of 14.37%, 13.82%, and 8.82%, respectively. The three bonds were traded at 1.038 million yuan, 8.9719 million yuan, and 16.5674 million yuan respectively.
[European bond market| European bond yields generally fell, with British 10-year bond yields falling 4.7 basis points to 4.463%]
Last Friday, European bond yields generally fell. British 10-year bond yields fell 4.7 basis points to 4.463%, French 10-year bond yields fell 1.2 basis points to 3.126%, German 10-year bond yields fell 2.5 basis points to 2.387%, Italian 10-year bond yields fell 2.2 basis points to 3.521%, Spanish 10-year bond yields fell 1.5 basis points to 3.027%.
[US bond market| US bond yields fell collectively, with 2-year US bond yields falling 6.01 basis points to 3.991%]
Last Friday, U.S. bond yields fell collectively. The two-year U.S. bond yield fell 6.01 basis points to 3.991%, the three-year U.S. bond yield fell 6.26 basis points to 3.9695%, and the five-year U.S. bond yield fell 5.76 basis points to 4.0156%. The 10-year U.S. bond yield fell 4.98 basis points to 4.2082%, and the 30-year U.S. bond yield fell 4.06 basis points to 4.4923%.
