Chinese dollar bonds
Special topic: This article focuses on the issuance of standby letters of credit in recent years. In recent years, the issuance of standby letters of credit has accounted for a relatively low proportion of total issuance, only approaching 10% in 2022, and the rest of the periods have been below 5%. So far in 2023, real estate bonds have been issued without SBLC guarantees, with 25 bonds issued by SBLC and 10 SBLC dollar bonds issued by non-real estate urban investment bonds, with urban investment accounting for the highest proportion. So far, SBLC has not defaulted on the issuance of Chinese dollar bonds.
Overseas, the yield on 10Y Treasury bonds rose above 4.7% at one point and then fell back to around 4.3%. On the one hand, economic data such as non-farm payrolls, ISM PMI, and CPI are less than expected, and on the other hand, the Federal Reserve's May interest rate meeting hinted that interest rate cuts within the year are still high probability events, and interest rate cut expectations have rebounded.
Domestically, the CPI in April was higher than market expectations, mainly due to the recovery of tourism services and the sharp rise in gold prices. In April, M1 and M2 continued to fall, and M1 turned negative year-on-year; The scale of new social financing was -198.7 billion yuan, a year-on-year decrease of 1.42 trillion yuan, which was the first time since 2006 that the new scale recorded a negative value. In the absence of an interest rate cut, it is difficult for the 10-year Treasury bond to break through 2.2%-2.25%. The bond market was headwinds in the second quarter. The current resistance level of the 10-year Treasury is 2.35%-2.40%.
In April, the China USD bond investment grade index fell 0.56%, while the high-yield index rose 0.91%. In terms of industries, real estate bonds rose by 1.34%, urban investment bonds rose by 0.58%, and financial bonds (excluding real estate) rose by 0.02%, indicating that the rebound momentum of real estate bonds slowed down.
The supervision of non-standard financing of urban investment has become stricter. Since May, the issuance scale of urban investment dim sum bonds has declined significantly. The risk of non-standard financing of low-level urban investment in non-key provinces has expanded, reflecting that the pressure on urban investment funds is still high.
Real estate policies continue to be optimized. In terms of policy impact, from the perspective of the supply side, it is not the first time that the policy of land supply has been contracted, and the actual impact needs to be observed whether the policy can be effectively implemented.
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