【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 326

2025-03-04

Focus

Work related to the issuance of RMB 2 trillion in swap bonds has already started

Lü Qinjian, the spokesperson of the third session of the 14th National People’s Congress, said that as of the end of last year, the full 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 in swap bonds for 2025 has already started. The Standing Committee of the National People’s Congress will strengthen supervision over the management of government debt in accordance with relevant laws and regulations, especially by enhancing tracking and supervision of the implementation of swap of existing hidden debts through increases in local government debt limits, to further promote strengthened government debt management.

New developments in “long-term funds” totaling RMB 3.3 trillion: insurers’ top bond preference in 2025

How will the RMB 3.3 trillion in insurer funds invest this year? Recently, the 2025 investor confidence survey results released by the China Association of Insurance Asset Management Industry show that among the 120 insurance asset management institutions and insurance companies participating in the survey, the most favored asset to allocate to in 2025 is bonds, followed by stocks and bank deposits.

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

New developments in “long-term funds” totaling RMB 3.3 trillion: insurers’ top bond preference in 2025

Macro updates

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

The Ministry of Finance has issued a notice, planning to issue 2025 bookkeeping-based discounted government bonds (Series 13) (28 days). The competitive tender for this tranche will be RMB 40 billion based on par value, with additional bidding by Category A members. Interest on this tranche of government bonds starts on March 6, 2025, and will be repaid at par on April 3, 2025 (with the holiday adjustment). The tender time is March 5, 2025.

The People’s Bank of China drained net RMB 280.3 billion in open market operations

On March 4, the People’s Bank of China conducted a 7-day reverse repo operation worth RMB 38.2 billion using a fixed interest rate and quantity bidding approach. The winning interest rate was 1.50%, unchanged from the previous level. Since RMB 318.5 billion of reverse repo operations matured today, the PBOC achieved a net drainage of RMB 280.3 billion for the day.

Regional highlights

Shandong province plans to issue RMB 20k of “special” new special-purpose government bonds

The Shandong Provincial Department of Finance announced plans to issue 2025 Shandong provincial government special-purpose bond(s) (Rounds 2 to 8), with a total scale of RMB 47.67 billion. Among them, the special-purpose bond (Round 8) will be a “special” newly added special-purpose bond, with proceeds used for multiple government investment projects. The planned issuance size for this tranche is RMB 20k, with a bond maturity of 10 years. The tender time is 2025-03-10 15:00—15:40.

Chongqing plans to issue RMB 20k of refinancing special-purpose bonds to swap existing hidden debts

The Chongqing Municipal Finance Bureau disclosed that 2025 Chongqing local government refinancing special-purpose bond(s) (Rounds 4 to 7) will be issued. The issuance size for this tranche is RMB 330k, with maturities of 7 years and 10 years. Of this, RMB 330k will be used to swap existing hidden debts, and the tender will be held on March 11.

Jinan SASAC: This year will focus on monitoring debts of chengtou companies, high-yield rate debt, and so on

In Jinan SASAC’s 2025 work priorities, the main goals this year are mentioned as follows: the total assets of enterprises fulfilling the role of the investor reach RMB 1.24 trillion; operating revenue reaches RMB 193.0 billion; R&D expenditure reaches RMB 330k; annual investment is RMB 90.0 billion or more.

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

Prevent and defuse debt-related risks. Strengthen the control of the asset-liability ratio, with a focus on monitoring chengtou company debts, high-yield rate debts, and so on. Embed supervision into the entire process of “borrow, use, manage, and repay” debt. Standardize the management of overseas investment by city-owned enterprises, and tightly control investments in high-risk overseas regions.

Issuance updates

Henan Airport Economic Zone Investment Group completes issuance of RMB 1.5 billion of medium-term notes, coupon rate 2.74%

On March 4, Henan Airport Economic Zone Investment Group completed the issuance of RMB 1.5 billion of medium-term notes with a coupon 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 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 medium-term notes to be issued tomorrow; subscription range 2.5%—3.5%

A notice by Zhoukou City Investment Group says that its 2025 first tranche of 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 issue size is RMB 830 million, with a term of 5 years. The proceeds are planned to be used to repay the principal and interest of the issuer’s bank interbank debt financing instruments due. The bond lead underwriter and bookrunner is Ping An Securities, and the joint lead underwriter is China CITIC Bank. On July 26, 2024, after comprehensive assessment by Orient Credit, the issuer’s main credit rating is AA+, with a stable outlook.

Pingdingshan Development and Investment Holding Group’s RMB 233 million short-term commercial paper to be issued tomorrow; subscription range 1.7%-2.7%

Pingdingshan Development and Investment Holding Group Co., Ltd. announced that the subscription period for its 2025 first tranche of short-term financing bills is from 2025-03-05 09:00 to 2025-03-06 18:00. The issuance size of the bond is RMB 233 million, with a term of 1 year. This debt financing instrument will be issued at par value, 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 of AA+. There are no issue-level ratings for this offering.

Zhengzhou Hi-Tech Investment Holding Group plans to issue RMB 1.5 billion of perpetual company bonds; received feedback from the SSE

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

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

A project of Zhumadian City Huangxin Information Industry Investment Co., Ltd. for the non-public issuance of rural revitalization corporate bonds to professional investors in 2024 has already received feedback from the SSE. This tranche’s planned issuance amount is RMB 700 million, and the product type is 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 under the Zhumadian City Industrial Investment Group.

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

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

Bond market issuers

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

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

Leshan Urban Construction Investment and Development (Group) plans to apply to all institutions for non-standard financing of no less than RMB 50 million; annual all-in cost no higher than 7%

Leshan Urban Construction Investment and Development (Group) Co., Ltd. released an announcement regarding the plan to raise 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, requiring an amount of no less than RMB 50 million, with a term of at least 1 year, and an annual all-in cost no higher than 7% per year. It invites institutions to submit financing proposals within 5 working days from the date of the announcement, including but not limited to the financing issuer, 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, accepts review and investigation

According to a report from the Zaozhuang Municipal Commission for Discipline Inspection and Supervision: 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 supervisory investigation by the Zaozhuang Municipal Commission for Discipline Inspection and Supervision.

Market views

Can the loosening of liquidity be sustained? Bond market conditions may unfold in three phases, and institutions expect pressures to come from outside in the later stage

Despite the current comfortable liquidity conditions, market divergence remains significant, and the core issue is whether the “loosening of liquidity can be sustained.” Many investors worry that early-month easing mainly came from funds released by fiscal spending at the end of February. Afterwards, as the PBOC drains liquidity through open market operations (as of February 28, the reverse repo stock still stood at RMB 1.8 trillion), by this coming Thursday and Friday, liquidity may return to a tight-but-balanced state.

The West China Macro fixed-income team believes that under such concerns, the bond market’s trajectory may also be divided into three stages.

The first stage will see rapid repair with the least resistance; timing may be in the first half of this week, shown by an overall decline in the yield curve.

The second stage is to confirm whether the repair of liquidity is sustainable, and whether it can cross the previously dense trading areas across tenors (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).

The third stage is when the yield curve continues to head toward the previous lows.

The West China Macro fixed-income team tends to believe that whether liquidity can be sustained, and where the pressure comes from, is mainly influenced by overseas tariffs. The market is still in an observation phase. If an additional 10% tariff is implemented again on March 4, and meanwhile other countries’ tariffs against China continue to intensify, the probability of liquidity loosening would be higher, and the probability of a reserve requirement ratio cut would also increase; the bond market may then intensify the development into the second and third stages.

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

(Editor-in-charge: Wang Zhiqiang HF013)

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