• 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
    monthly average.
    • 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.