【Zhejiang Commercial Bank FICC·Credit Bond Daily Report】Trading and Allocation Divergence

(Source: Zhejiang Commercial Bank FICC)

In the primary market, a total of 48.502 billion yuan was issued today, including 26.48 billion yuan of short-term commercial paper, 20.02 billion yuan of medium-term notes, and 2.002 billion yuan of PPN. For short-term commercial paper, the 120-day Jiangsu Gaoke SCP001 was issued at a low valuation of 1.58%, with a multiple of 5.16 times; the 206-day Liu’an Urban Investment SCP002 issued 4.5 billion yuan, ultimately at a low valuation of 1.65%, with a multiple of 5.13 times; fund participation was active. For medium-term notes, the 3-year Jiaxing State-owned MTN001 issued 1 billion yuan, with a multiple of 4.60 times, and was issued at a final low valuation of 1.74%; the 5-year Yu Jiao Investment MTN001 was issued at a low valuation of 1.73%, with a multiple of 5.50 times, mainly involving funds; the 2-year Hainan Kai Investment PPN001 issued 500 million yuan, ultimately at a 1.95% cutoff, with a multiple of 1.68 times.

In the secondary market, trading volume continued to decline compared to the previous day, with a total of 1,400 transactions today, mostly around estimated value. Credit bonds within 1 year saw 485 transactions, placing in the 29th percentile for one-year maturity, generally traded at a low valuation of about 1-2 basis points, with a median transaction yield of 1.65%. Credit bonds with 1-3 years maturity had 612 transactions, in the 40th percentile for one-year maturity, mainly AAA-rated issuers, with buying mainly by funds and banks, and a median yield of 1.89%. Trading in 3-5 year credit bonds continued to decline, in the 37th percentile for one-year maturity, with about 260 transactions, an average low valuation of 0.87 basis points, and a yield center around 2.16%. Credit bonds over 5 years had only 44 transactions today, in the 10th percentile for one-year maturity, mainly traded at about 1 basis point low valuation.

Market Summary

Today’s market momentum showed a slight easing of the impact of the previous stagnation logic on bonds. Treasury Liquidity (TL) opened lower and then rose, approaching a fill of the gap around 11 o’clock; in the afternoon, the market began pricing in the risk of increased weekend conflicts, with both stocks and bonds continuing to weaken. The news about canceling the 5% lower limit of the reserve requirement ratio at the end of the day did not effectively stimulate the market, with only half a basis point of rate adjustment on the long end. Credit market bid rates and trading volume declined throughout the day, mainly trading in the 1-3 year segment, with continued retreat in 3-5 year trading sentiment; intra-day, trading and allocation assets showed significant divergence, with AAA high-grade entities trading around valuation levels with limited downward momentum, while demand for AA+ and below was relatively stronger. Close attention should be paid to the evolution of geopolitical conflicts over the weekend and cross-season liquidity supply; participation in medium- and long-term credit remains cautious recently.

Market Data

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