Editor丨Zhongding Holding Group.
1. Bond market performance
Money market
From November to mid-December 2023, the currency market tightened first and then loosened. In November, the interbank market continued to be relatively tight since late August and lasted until the November cross-month, but after entering December, the overall interbank funds began to loosen. However, the exchange repo rate is still significantly and persistently higher than the policy reverse repo 18% level.
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Interest rate bonds
Since November, the overall interest rate bond has fluctuated slightly, with the whole fluctuation range only about 5bp, and the interest rate is at 265-2.7% oscillates, no trend. It can be seen that since September, the overall interest rate has oscillated between the slow economic recovery and the lack of policy strength, and when the special refinancing bonds continue to be issued, other interest rate varieties will be squeezed, but in December, it began to tend to decline slightly.
Credit Bonds
1) Urban investment bonds
Throughout November, the yield of urban investment bonds was in the process of stabilizing on a downward slope until the first month, but the overall situation was still in a downward state, especially the interest rate of weakly qualified urban investment in this round of bonds fell extremely obviously. In our view, this is more due to the change in the relationship between supply and demand in the market, and on the premise that the standard bonds of urban investment are still safe assets, there is too much money in the market chasing the assets that are already scarce. In particular, some regions have even started to prepay bonds, exacerbating the rise in yields.
2) Credit spreads in key regions
In terms of regional interest rate differentials, the overall interest rate spread is still significantly downward, but the situation has changed somewhat since November, and the high-quality areas such as Shanghai and Beijing in the early stage have been low enough because the interest rate has been low enough, and with the continued tightness of the capital side, there has been a certain slight upward movement.
In the early stage, Internet celebrity regions such as Guizhou, Yunnan and Guangxi still continued to decline significantly, and the improvement of local ** liquidity by overall refinancing bonds and special treasury bonds is great in the short term.
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3) Industrial bonds
The overall fluctuation of industrial bonds is small, and from the figure below, it is mainly similar to the performance of interest rate bonds, and is currently hovering at a low level.
Macro Credit & Other Markets
In November, refinancing bonds continued to be issued at a high intensity, and the overall macro credit ran at a high level under the support of local ** bonds, but there was a continuous relatively tight situation on the capital side, which is the transformation from easy money to easy credit, and the main body of leverage is the local **.
However, at the real estate level, what we see at present is only the policy support behavior, and there is no significant stimulus, which leads to the relevant upstream and downstream industries or continue to be weak and weak, resulting in the weakening of the household wealth effect, and the symptom of balance sheet recession continues.
The year-on-year growth rate of CPI in November 2023 was -05%, the year-on-year growth rate of PPI was -3%, and a macroeconomic surplus pattern basically appeared. This is the result of the interweaving of medium- and long-term and short-term factors and internal and external factors in China's economy. It is expected that the pattern of easy money and easy credit will continue in December and 2023, and the recovery of the real estate market is expected.
The interbank certificate of deposit interest rate continues to rise, which is related to the continued shortage of funds, and is expected to continue to run at a high level under the influence of the year-end New Year's Eve factor.
In terms of wealth management income, we believe that as the yield of urban investment bonds is still low, the yield of wealth management products, as one of the main participants in the allocation of urban investment bonds, is still a high probability event, and the reason for the decline in wealth management yield relative to asset yield may lie in the lock-up period setting, high-yield bond bottom position, etc.
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2. Brief market review and investment strategy
From November 2023 to the present, the overall funding situation is still tight, which is related to the issuance of local special refinancing bonds, and has caused a certain extremely fragmented market.
However, this situation eased in late November, with funds easing after the cross-month period, and urban investment bond yields starting to rise slightly, and the most difficult time for investment-based assets has passed.
In the short term, the upward trend of yields should be weak upward, because it coincides with the end of the year and the issuance of refinancing bonds is basically over, but the efforts to transform bonds are still continuing, the package is still being implemented, and the extent of the yield rise may be very limited. In terms of strategy, we adhere to the strategy of allocating short-duration bonds on high prices and do a good job in liquidity management at the end of the year.
3. Target excavation and research
20 Naxing 03, the issuer is Sichuan Naxing Industrial Group, and the penetrating shareholders are the Luzhou State-owned Assets Supervision and Administration Commission and the Sichuan Provincial Department of Finance. The 2022 annual report shows that the company has a relatively high proportion of entrusted construction and commodity sales.
As of the 2023 interim report, the company's total assets are 3005.9 billion yuan, with an asset-liability ratio of 5127%, and the company received credit of 1672.2 billion yuan, while the unused part is as high as 706.2 billion yuan.
The prefecture-level city where the company is located is Luzhou City, with a GDP of 2601 in 20225.2 billion yuan, an increase of 8 over the previous year12%, ranking 6th in the province, while the proportion of general budget revenue + **sexuality ** to GDP is 10%, and the coverage rate of debt is average, but considering the epidemic situation in 2022, it will improve in 2023.
The company's current outstanding bonds are 3.2 billion yuan, and the subsidy in the past three years is as high as 196.6 billion yuan, Sichuan is not an excessive Internet celebrity area, its overall regional interest rate spread is low, debt control is better, credit risk is low, appropriate investment will increase the diversification of positions, with the role of optimizing asset allocation.