Oriental Jincheng said in a Sept. 14 report that September credit bond supply
should seasonally decline as issuers complete supplemental half‑year reports,
leading to a month‑on‑month drop in net financing. Demand is set to weaken as
quarter‑end balance‑sheet pressures curb wealth‑management allocations to credit
bonds, the open‑ended scale of amortized‑cost bond funds contracts, and
increased government bond issuance crowds out allocation funds. The agency
expects the bond market to remain broadly range‑bound in September with seasonal
weakening in credit‑bond allocation power. Credit spreads sit at historic lows
with thin safety buffers, making spreads easier to widen than tighten. Short‑end
credit spreads face modest widening risk amid funding volatility;
mid‑to‑long‑end spreads may trade in a narrow range supported by amortized‑cost
bond funds. Lower‑rated issuers are likely to see greater valuation volatility.
Recommended positioning: favoured mid‑to‑high‑grade coupon strategies, extend
duration on high‑quality issuers to 3–5 years, and prioritise instruments with
both coupon and liquidity. Liquidity is expected to remain in a narrow range in
September and spread space is limited; avoid increasing leverage.
