【Zhejiang Commercial Bank FICC·Credit Bond Daily Report】Term Differentiation

(Source: Zhejiang Merchants Bank FICC)

On the primary market, 53 new bonds were issued today with a total issuance scale of 72.642 billion yuan, including 19.7 billion yuan of short-term commercial paper, 43.35 billion yuan of medium-term notes, 4.25 billion yuan of PPN, and 5.342 billion yuan of ABN. The larger issuance scale mainly comes from the 2nd phase of the power grid issuance totaling 25 billion yuan; bank proprietary trading remains the main force in winning bids, with many bids at low valuations and a hot pursuit of lower prices.

In the secondary market, overall fluctuations were narrow, with significant maturity-based differentiation: ultra-short-term products within 1 year led in trading activity, generally trading 1 basis point below valuation; products with 1-5 years maturity traded within a range of -2bp to +1bp relative to ChinaBond valuation; medium- and long-term credit bonds overall traded at 0.5 to 1bp above valuation. The strategy of targeting weaker credit entities continues, with AA-rated bonds trading at obvious undervaluation, and active trading in real estate, construction, and other entity bonds. From institutional behavior, main buyers are funds and wealth management products, with less buying by proprietary trading institutions.

Market Summary

Today, global liquidity disturbances continued, with most major asset classes under pressure except for the energy sector; domestic A-shares briefly fell below 3,800 points during the session but stabilized slightly at the end. Interbank market liquidity remained stable and ample, with the 1-year interbank CD yield slightly rebounding from previous lows. The current bond market showed a pattern of initial strength followed by weakness, with narrow fluctuations; there are no clear signals of funds shifting decisively into bonds, and price volatility is mainly driven by trading activity, with little new interest from allocation funds. In the credit bond market, the cost-effectiveness of new issues has marginally decreased, secondary market trading still mainly occurs at low valuations, but overall trading volume has shrunk significantly, and the space for further compression of credit spreads is limited. Overall, the credit bond market currently maintains a narrow range of stock-and-flow game, approaching quarter-end, with focus on liquidity conditions and marginal changes in trading activity of sinking assets.

Market Data

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