• Bond issuance progress has been slow
- Only 20% of projected full year net CGB issuances were completed in 1H.
• Expect a 2H ramp-up in CGB and LGB issuances, to around CNY800bn net
• CNY liquidity should tighten ahead – 7D interbank repo rates to gradually rise
within 2.25-2.50% range.
• Bias is for CNY swap and bond rates to moderately rise and curves to flatten.
• Implication for investors 1: We initiate a pay 2Y CNY NDIRS idea to position for
tighter CNY liquidity, and also express our flattening view when combined
with our running idea of long 30Y CGB.