【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 in exchange bonds for 2025 has already started

Luo Qinjian, the spokesperson for the third session of the 14th National People’s Congress, said that as of the end of last year, all RMB 2 trillion in exchange bond quotas for 2024 had been fully issued, and most regions had completed the exchanges. Work related to the issuance of RMB 2 trillion in exchange bonds in 2025 has already started. The Standing Committee of the National People’s Congress will, in accordance with relevant laws and regulations, strengthen supervision of the government debt management situation, especially tracking and monitoring the implementation of measures to exchange outstanding hidden debts by increasing local government debt limits, and will work to further strengthen government debt management.

A new development for “long-term funds” totaling RMB 33 trillion: insurers’ most preferred bonds in 2025

How will insurers with RMB 33 trillion in “long-term funds” invest this year? A survey on investor confidence for 2025, released recently by the China Association of Insurance Asset Management Practitioners, shows that among the 120 insurance asset management institutions and insurance companies that participated in the survey, the asset they are most inclined to allocate to this year is bonds, followed by stocks and bank deposits.

Most insurance institutions expect that the target allocation ratios of various assets in 2025 will remain basically the same as in 2024. More than half of insurance institutions may increase their bond and stock investments moderately or slightly.

33 trillion “long-term funds” new trend: insurers’ most preferred bonds in 2025

Macroeconomic Developments

Ministry of Finance plans to issue RMB 40 billion 28-day government bonds

The Ministry of Finance has issued a notice stating that it plans to issue the 2025 ledger-based discounted (No. 13) government bonds (28 days). The competitive tender for this tranche has a total face value of RMB 40 billion, and eligible Class A members may submit additional bids. Interest for these government bonds will accrue starting March 6, 2025, and repayment at face value will take place on April 3, 2025 (with holiday extensions). The tender period is March 5, 2025.

The PBOC drains a net RMB 280.3 billion in open market operations

On March 4, the People’s Bank of China conducted a 382 billion yuan 7-day reverse repo operation via a fixed-rate, quantity-based bidding approach. The winning interest rate was 1.50%, unchanged from the previous level. Since 318.5 billion yuan in reverse repos matured today, the PBOC achieved a net drain of RMB 280.3 billion for the day.

Regional Highlights

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

The Shandong Provincial Department of Finance announced that it plans to issue 2025 Shandong Province special-purpose government bond tranches (Nos. 2 through 8), with a total size of RMB 47.67 billion. Among them, tranche (No. 8) is a “special” newly added special-purpose government bond. The proceeds 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 tender time is 15:00—15:40 on March 10, 2025.

Chongqing plans to issue RMB 23.058 billion of refinancing special-purpose government bonds to exchange existing hidden debts

The Finance Bureau of Chongqing disclosed that, for 2025, Chongqing’s local government refinancing special-purpose government bond tranches (Nos. 4 through 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 exchange existing hidden debts, and bidding will be held on March 11.

Jinan SASAC: This year will focus on monitoring municipal financing vehicle (chengtou) company debt, high-yield debt, and more

In Jinan’s SASAC work priorities for 2025, the key targets for this year are mentioned: the total assets of enterprises fulfilling the investor’s responsibilities will reach RMB 1.24 trillion; operating revenue will reach RMB 193 billion; R&D expense investment will reach RMB 3.439 billion; and annual investment will be RMB 90 billion or more.

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

Prevent and resolve debt risk. Strengthen control over the asset-liability ratio, focusing on monitoring municipal financing vehicle debt, high-yield debt, and others, and embed supervision throughout the entire process of “borrowing, using, managing, and repaying” debt. Standardize cross-border investment management for city-owned enterprises, and strictly control investments in high-risk regions outside the country.

Issuance Watch

Henan Airport and Port Investment Group completes issuance of RMB 1.5 billion MTNs, coupon rate 2.74%

News on March 4: Henan Airport and Port Investment Group completed the issuance of RMB 1.5 billion in medium-term notes, with an interest rate of 2.74% and a term of 3 years. The lead underwriter and bookrunner is Bank of Communications, and the joint lead underwriters are Bank of China and Citic Bank. The proceeds are planned to be used entirely to repay the debt financing instruments of the issuer that are outstanding and will mature.

Zhoukou Investment Group’s RMB 830 million MTNs will be issued starting tomorrow; subscription range 2.5%—3.5%

An announcement from Zhoukou City Investment Group states that its first tranche of 2025 medium-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 of the issuer’s bank debt financing instruments due. The lead underwriter and bookrunner is Ping An Securities, and the joint lead underwriter is CITIC Bank. On July 26, 2024, after a comprehensive assessment by Orient Securities (Eastcom?), the issuer’s main credit rating was AA+, with a stable outlook.

Pingdingshan Development & Investment Holding Group’s RMB 233 million short-term notes will be issued starting tomorrow; subscription range 1.7%-2.7%

An announcement from Pingdingshan Development Investment Holding Group states that the subscription period for the company’s first tranche of 2025 short-term financing bills is from 09:00 on March 5, 2025 to 18:00 on March 6, 2025. The issuance size of this bond 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 rating as AA+. No instrument-level rating has been assigned for this issuance.

Zhengzhou Hi-Tech Investment Holding Group plans to issue RMB 1.5 billion perpetual corporate bonds; received feedback from the Shanghai Stock Exchange

Zhengzhou Hi-Tech Investment Holding Group Co., Ltd.’s project to issue perpetual corporate bonds through non-public placement to professional investors for 2025 received feedback from the Shanghai Stock Exchange. The amount proposed for issuance is RMB 1.5 billion, and the underwriter/manager is CITIC Construction Investment. On July 26, 2024, after a comprehensive assessment by United Credit Rating, the issuer’s main credit rating was AA+, with a stable outlook.

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

Zhumadian City Huangxin Information Industry Investment Co., Ltd.’s project for non-public placement of rural revitalization corporate bonds aimed at professional investors in 2024 has already received feedback from the Shanghai Stock Exchange. This tranche proposes to issue RMB 700 million, with the product type being private placement bonds. The underwriter/manager is Sino-German Securities. 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 MTNs; coupon rate 2.02%

Henan Water Conservancy Investment Group has completed the issuance of its first tranche of 2025 medium-term notes. This tranche has an issuance size of RMB 700 million, an interest rate of 2.02%, and a term of 5 years. The lead underwriter for the bonds is Pudong Development Bank, and the joint lead underwriter is Huaxia Bank. After a comprehensive assessment by Shanghai Brilliance Ratings, the issuer’s main credit rating is AAA. The proceeds raised from this tranche are planned to be used to repay existing interest-bearing liabilities.

Bond Market Subject Parties

United International: confirms Yingyang chengtou BBB international long-term issuer rating

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

Leshan Urban Construction Investment & Development (Group) Co., Ltd. plans to apply to various institutions for non-standard financing of no less than RMB 50 million; the annual all-in cost will be no higher than 7%

Leshan City Urban Construction Investment & Development (Group) Co., Ltd. has 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. The required amount is not less than RMB 50 million, the term is not less than 1 year, and the annual all-in cost will not exceed 7% per year. Various institutions are cordially invited to submit their financing proposals within 5 working days from the date of the announcement, including but not limited to the financing主体, financing amount, financing term, financing cost, guarantee method, and other necessary conditions.

Bond Market Sentiment

Cao Bin, Deputy General Manager of Zaozhuang Culture, Tourism and Development Group, is under review and investigation

According to the disciplinary inspection and supervision commission of Zaozhuang: Cao Bin, a member of the Party committee and deputy general manager of Zaozhuang Culture, Tourism and Development Group Co., Ltd., is suspected of serious violations of discipline and law, and is currently undergoing disciplinary review and supervision investigation by the disciplinary inspection and supervision commission of Zaozhuang.

Market Views

Can the liquidity remain loose? The bond market’s行情 development may unfold in three stages, with institutions expecting pressure mainly coming from outside

With the current comfortable liquidity environment, market divergence remains significant; the core issue boils down to whether “loose liquidity can be sustained.” Many investors are concerned that the looseness at the beginning of the month mainly came from funds released by fiscal spending at the end of February. After that, as the PBOC drains funds through open market operations (as of February 28, the reverse repo stock remains 1.8 trillion yuan), by Thursday and Friday of this week, liquidity may return to a tight-but-balanced state.

A macro and fixed-income team at West China believes that under such concerns, the bond market行情 development may also be divided into three stages.

In the first stage, the fastest repair with the least resistance is likely to occur in the first half of this week, reflected in the broad decline of the yield curve;

The second stage is to confirm the sustainability of the liquidity repair, as well as to cross through the previously dense trading zones across various maturities (the dense trading points for 3-, 5-, 7-, 10-, and 30-year Treasury bonds are 1.30%, 1.40%, 1.65%, 1.70%, and 1.85%, respectively);

The third stage is that 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 remain loose—or face pressure—will mainly be affected by overseas tariffs. We are still in an observation phase. If on March 4 an additional 10% tariff is implemented again, and simultaneously other countries’ tariffs against China also continue to emerge one after another, the probability that liquidity turns looser would be higher, and the probability of a reserve requirement ratio cut would also rise. The bond market may then develop further into the second and third stages.

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

(Responsible Editor: Wang Zhiqiang HF013)

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