【Cube Bond Market Pass】 This year's 2 trillion yuan debt swap issuance has started / Zhengzhou AA+ platform plans to issue 1.5 billion yuan / Two urban investment companies to issue short-term and medium-term notes exceeding 1 billion yuan starting tomorrow

Issue No. 326

2025-03-04

Focus

Work related to the issuance of RMB 2 trillion of swap bonds has already been launched

Lou Qinjian, the spokesperson for the Third Session of the 14th National People’s Congress, said that as of the end of last year, the entire RMB 2 trillion swap bond quota for 2024 had been fully issued, and most regions have completed the swaps. Work related to the issuance of RMB 2 trillion of swap bonds in 2025 has already been launched. The Standing Committee of the National People’s Congress will, in accordance with relevant laws and regulations, strengthen oversight of the management of government debt, especially strengthen tracking and supervision of the implementation of swapping outstanding hidden debts by increasing local government debt limits, and promote further strengthening of government debt management.

A new trend for “long-term funds” of RMB 3.3 trillion: insurance capital’s most preferred bond in 2025

How will RMB 3.3 trillion in insurance capital invest this year? Recently, the China Insurance Asset Management Association released the results of its 2025 investor confidence survey for insurance asset management. The survey shows that among the 120 insurance asset management institutions and insurance companies that participated, the asset they prefer to allocate to this year is bonds, followed by stocks and bank deposits.

Most insurance institutions expect that in 2025 the allocation proportions of various assets will remain basically consistent with 2024. More than half of the insurance institutions may increase bond and stock investments in a moderate way or by a small amount.

A new trend for “long-term funds” of RMB 3.3 trillion: insurance capital’s most preferred bond in 2025

Macroeconomic Updates

The Ministry of Finance plans to issue RMB 40 billion in 28-day treasury bonds

The Ministry of Finance has issued a notice stating that it plans to issue 2025 book-entry discounted treasury bonds (Issue 13) with a maturity of 28 days. The total par value amount for competitive bidding for this issue is RMB 40 billion. Eligible Class A members may make additional bids. Interest on this treasury bond issue starts on March 6, 2025, and it will be repaid at par on April 3, 2025 (with holiday adjustments). The bidding period is March 5, 2025.

The central bank conducts net draining of RMB 280.3 billion through open market operations

On March 4, the People’s Bank of China conducted a 382 billion yuan 7-day reverse repurchase operation using a fixed interest rate and quantity bidding method. The bid-winning rate was 1.50%, unchanged from the previous level. Since 318.5 billion yuan in reverse repos matured today, the central bank achieved net draining of 280.3 billion yuan on the day.

Regional Hot Topics

Shandong Province plans to issue RMB 2.735 billion of “special” newly added special-purpose government bonds

The Shandong Provincial Department of Finance has issued an announcement stating that Shandong plans to issue 2025 Shandong provincial government special bonds (Issues 2 to 8), with a total issuance size of RMB 47.67 billion. Among them, the special-purpose bond (Issue 8) will be a “special” newly added special-purpose government bond. Funds raised will be used for multiple government investment projects. The planned issuance size for this tranche is RMB 2.735 billion, with a bond term of 10 years. The bidding time is from 15:00 to 15:40 on March 10, 2025.

Chongqing plans to issue RMB 23.058 billion of refinancing special bonds to swap out existing hidden liabilities

The Chongqing Municipal Finance Bureau disclosed that 2025 Chongqing local government refinancing special bond(s) (Issues 4 to 7) will be issued. The issuance size for this batch is RMB 24.063 billion, with terms of 7 and 10 years. Of this, RMB 23.058 billion will be used to swap out existing hidden liabilities, with bidding on March 11.

Jinan State-owned Assets Supervision and Administration Commission: this year will focus on monitoring debts of urban investment companies, high-yield-rate debt, etc.

In the Jinan SASAC’s 2025 work priorities, it is mentioned that the main goals for this year are: the total asset value of enterprises fulfilling the duties of the investor will reach RMB 1.24 trillion; operating revenue will reach RMB 193 billion; R&D expenditure will reach RMB 3.439 billion; and annual investment will be RMB 90 billion or more.

Accelerate efforts to revitalize and unlock assets. Clarify the asset base of municipal enterprises, coordinate management with asset revitalization activities, and complete the “two ledgers and one report.” Guide state-owned enterprises to comprehensively sort out assets that have stable cash flows and predictable value, and flexibly use structured financing tools such as asset-backed securities (ABS), mortgage-backed securities (MBS), and other instruments to carry out asset securitization, thereby improving the efficiency of asset utilization.

Prevent and defuse debt risk. Strengthen control over the asset-liability ratio, focusing on monitoring debts of urban investment companies, high-yield-rate debt, and the like; embed supervision into the whole process of “borrowing, using, managing, and repaying” debt. Standardize overseas investment management by municipal enterprises, and strictly control investments in overseas high-risk regions.

Issuance Updates

Henan Airport Economy Investment Group completes issuance of RMB 1.5 billion of mid-term notes; coupon rate 2.74%

On March 4, news reported that Henan Airport Economy Investment Group completed the issuance of RMB 1.5 billion in mid-term notes, with a coupon rate of 2.74% and a term of 3 years. The lead underwriter and bookrunner is Bank of Communications; the joint lead underwriters are China Bank and Zhongyuan Bank. The proceeds are planned to be used entirely to repay the debt financing instruments outstanding of the issuer.

Zhoukou Investment Group’s RMB 830 million mid-term notes to be issued tomorrow; subscription range 2.5%–3.5%

A public notice from Zhoukou City Investment Group states that its 2025 first tranche of mid-term notes is scheduled to be issued from March 5, 2025 to March 6, 2025, with a subscription range of 2.50%–3.50%. The issuance size of this tranche is RMB 830 million, with a term of 5 years. The proceeds are planned to be used to repay principal and interest on the issuer’s maturing interbank debt financing instruments. The lead underwriter and bookrunner for the bond is Ping An Securities, and the joint lead underwriter is China Citic Bank. On July 26, 2024, after comprehensive assessment by Oriental GmE Credit, the issuer’s main credit rating was AA+, with a stable outlook.

Pingdingshan Development & Investment Holding Group’s RMB 233 million short-term financing bills to be issued tomorrow; subscription range 1.7%-2.7%

Pingdingshan Development Investment Holding Group announced that the subscription period for its 2025 first tranche of short-term financing bills is from 09:00 on March 5, 2025 to 18:00 on March 6, 2025. The issuance size of these bills is RMB 233 million, with a term of 1 year. This tranche of debt financing instruments will be issued at par, with a subscription range of 1.70%-2.70%. The value date is March 7, 2025, and the redemption date is March 7, 2026. On November 13, 2024, Dagong International assigned the issuer’s main credit level of AA+. There will be no issue-level rating for this tranche.

Zhengzhou Hi-Tech Investment & Holding Group plans to issue RMB 1.5 billion of perpetual (reissuable) corporate bonds; received feedback from the SSE

The Hi-Tech Investment & Holding Group Co., Ltd. of Zhengzhou received feedback from the Shanghai Stock Exchange regarding its project for the non-public offering of perpetual corporate bonds to professional investors in 2025. The planned issuance amount is RMB 1.5 billion, with CITIC Securities Investment Banking as the underwriter/manager. On July 26, 2024, after a comprehensive assessment by United Ratings, the issuer’s main credit rating was AA+, with a stable outlook.

Pingdian? (Note: Keep original content) — Pingmatian? (No: translate only, but original line):

Zhumadian Huangxin Information Industry Investment Co., Ltd. plans to issue RMB 700 million rural revitalization bonds; received feedback from the SSE

Zhumadian City Huangxin Information Industry Investment Co., Ltd.’s project for the non-public offering of rural revitalization corporate bonds to professional investors in 2024 has already received feedback from the SSE. The planned issuance amount for this tranche is RMB 700 million. The bond type is private placement notes, with Sino-German Securities as the underwriter/manager. Zhumadian City Huangxin Information Industry Investment Co., Ltd. is a wholly-owned subsidiary of Zhumadian City Development Investment Group, and the latter is affiliated with Zhumadian City Industrial Investment Group.

Henan Water Conservancy Investment Group completes issuance of RMB 700 million mid-term notes; coupon rate 2.02%

Henan Water Conservancy Investment Group completed the issuance of its 2025 first tranche of mid-term notes. The issuance size of this tranche is RMB 700 million, with a coupon rate of 2.02% and a term of 5 years. The bond lead underwriter is Pudong Development Bank, and the joint lead underwriter is Huaxia Bank. After a comprehensive assessment by Shanghai Xinxing Credit Rating, the issuer’s main credit rating is AAA. The proceeds from this bond issue are planned to be used to repay interest-bearing liabilities on the books.

Bond Market Main Players

United International: confirms Yingyang Urban Investment Group Co., Ltd.’s BBB international long-term issuer rating

On March 4, United International confirmed Yingyang City Development Investment Group Co., Ltd.’s international long-term issuer rating of BBB, with a stable outlook.

Leshan Chengjian Investment Development (Group) Co., Ltd. plans to apply to all institutions for non-standard financing of no less than RMB 50 million, with an annual all-in cost no higher than 7%

Leshan City Construction Investment and Development (Group) Co., Ltd. released an announcement regarding its proposed external financing of RMB 50 million. The announcement states that to supplement working capital, it plans to apply to various institutions for non-standard financing, with the amount required to be no less than RMB 50 million, the term of no less than 1 year, and an annual all-in cost not exceeding 7% per year. Institutions are invited to submit financing proposals within 5 business days from the date of the announcement, including but not limited to financing subject, financing amount, financing term, financing cost, guarantee method, and other necessary conditions.

Bond Market Sentiment

Cao Bin, deputy general manager of Zaozhuang Culture, Sports, and Tourism Development Group, accepts review and investigation

According to a message from the Discipline Inspection and Supervision Commission of Zaozhuang City: Cao Bin, a member of the Party committee and deputy general manager of Zaozhuang Culture, Sports, and Tourism Development Group Co., Ltd., is suspected of serious violations of discipline and law, and is currently being investigated by the Discipline Inspection and Supervision Commission of Zaozhuang City.

Market Viewpoints

Can the ample liquidity situation continue? The bond market’s performance may be played out in three phases; institutions expect pressure may come from the outside

Given the current comfortable liquidity conditions, market divergence remains significant, and the core contradiction lies in whether “ample liquidity can be sustained.” Many investors worry that the easing at the beginning of the month mainly came from funds released by fiscal expenditures at the end of February. Going forward, as the central bank drains liquidity through open market operations (as of February 28, the reverse repo stock still has RMB 1.8 trillion), by this Thursday and Friday the liquidity situation may return to a tight balance.

The West China Macro and Fixed Income team believes that under such concerns, the bond market’s performance may also be divided into three phases.

The first phase will see the fastest recovery with the least resistance, with timing likely in the first half of this week, characterized by an across-the-board decline in the yield curve;

The second phase is to confirm the sustainability of the liquidity recovery, as well as the crossing of the previously dense trading zone across maturities (the dense trading points for 3-year, 5-year, 7-year, 10-year, and 30-year government bonds are 1.30%, 1.40%, 1.65%, 1.70%, and 1.85% respectively);

In the third phase, the yield curve continues to move toward the previous lows.

The West China Macro and Fixed Income team tends to believe that whether liquidity can be sustained depends on pressure coming from abroad, mainly affected by overseas tariffs. We are still in the observation stage. If the additional 10% tariff is implemented again on March 4, and at the same time other countries’ tariffs toward China continue to escalate, the probability of liquidity easing would be higher, and the probability of a reserve requirement ratio cut would also rise. The bond market may “ferment” into the second and third stages.

Editors: Tao Jiyan | Review: Li Zhen | Supervision: Wan Junwei

(Responsible editor: Wang Zhiqiang HF013)

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