Quarterly data map of the China bond market: yields, fund flows, supply, and default trends

Overview

This is a quarterly analysis report on the China bond market, themed China Bond Analytics, covering onshore bond yields, short-end rates, new issue yields, market structure, foreign inflows, BondConnect trading, foreign currency loans and deposits, liquidity, bond holdings, issuance trends, debt maturities, rating actions, and defaults as of June 30, 2026.

Core views

The report is more focused on data mapping and market monitoring than on a single investment recommendation. Core focus areas include: comparison of onshore AAA and offshore investment-grade index performance, the structure of government bonds and financial bonds in the outstanding market, the distribution of SOE and POE corporate bonds by rating and industry, issuance and maturity pressure for LGFV bonds and real estate bonds, and changes in default rates by industry and ownership type.

Analysis framework

The report tracks the China bond market through multidimensional charts: it first compares total returns and yields of onshore and offshore bond indices, then breaks down outstanding bonds, bondholders, issuance supply, rating distribution, industry structure, maturities in key sectors, and default indicators, forming a quarterly monitoring framework from macro liquidity to credit risk.

Methodology notes

• Fixed income credit researchJ.P. Morgan credit research rating methodology

  Relative value and fundamental assessment of bonds and issuers

  The disclosure section states that J.P. Morgan's bond rating system combines relative value with judgments on the issuer's underlying credit trends, overall credit quality, debt-servicing capacity, cash flow, leverage, interest coverage, liquidity, profitability, capital position, and asset quality, among other indicators.

• Market structure analysisBreakdown of bond outstanding amount, supply, and holdings

  Observe market structure by category, ownership type, industry, rating, and holder classification

  The report breaks down China onshore bonds into government bonds, financial bonds, and corporate bonds, and further examines changes in outstanding amount and supply by SOE, POE, industry, issuer rating, bondholder, and key sectors.

• Credit risk monitoringAnalysis of maturities, rating actions, and default rates

  Assess credit risk pressure through debt maturities, rating migration, and default rates

  The report tracks debt maturities across different sectors, rating categories, ownership types, and industries, and combines this with rolling 6-month and 12-month rating action trends as well as the number, amount, and rate of defaults for risk monitoring.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China onshore government bonds

  Market benchmark and core liquidity asset

  Strengths

  The report separately tracks government bond outstanding amount, issuance, net supply, and holdings, helping to observe the supply-demand dynamics and liquidity environment of rates products.

  Weaknesses

  The source material does not provide specific yield forecasts or clear trading recommendations.

  Comparison

  Compared with financial bonds and corporate bonds, government bonds are more oriented toward observing macro rates and policy liquidity.

  Risks

  Inflation, reserve requirement ratios, onshore liquidity, and yield changes may affect performance.

• China onshore financial bonds

  An important component of the fixed income market

  Strengths

  The report breaks down financial bond outstanding amount, issuance, net supply, and holder structure.

  Weaknesses

  No recommendations are disclosed for bonds of individual financial institutions.

  Comparison

  Compared with government bonds, financial bonds are more affected by financial institution credit and market spreads; compared with corporate bonds, they are usually more closely tied to financial system liquidity.

  Risks

  Liquidity in the financial system, credit spreads, and regulatory changes may affect supply and demand.

• China onshore corporate bonds

  The main object for observing credit risk and industry differentiation

  Strengths

  The report breaks down corporate bond outstanding amount and supply by SOE, POE, industry, rating, and holder.

  Weaknesses

  The source material mainly consists of chart titles and disclosure text, lacking detailed numerical breakdowns by specific industry.

  Comparison

  Compared with government bonds and financial bonds, corporate bonds better reflect corporate credit differentiation.

  Risks

  Industry default rates, rating downgrades, concentrated debt maturities, and changes in the financing environment are the main risks.

• LGFV bonds / LGFV bonds

  A key sector for observing credit supply and maturity pressure

  Strengths

  The report separately covers total supply and net supply of onshore and offshore LGFV bonds, as well as 2025 bond outstanding amounts and credit spreads across different provinces.

  Weaknesses

  It does not provide a specific provincial investment ranking or single-bond recommendations.

  Comparison

  Compared with ordinary corporate bonds, LGFV bonds rely more on local government finances and regional economic conditions.

  Risks

  Local government fiscal pressure, regional economic differences, widening credit spreads, and refinancing pressure from maturities.

• Real estate bonds / real estate bonds

  A key credit risk sector

  Strengths

  The report tracks supply from onshore real estate companies and debt maturities by rating category.

  Weaknesses

  The source material does not disclose ratings or target prices for individual real estate issuers.

  Comparison

  Compared with LGFV bonds, real estate bonds are more directly exposed to property sector fundamentals and the degree of financing recovery.

  Risks

  Slower-than-expected sales recovery, restricted refinancing, rising default rates, and rating downgrades.

Key data

• Report coverage periodFor the quarter ended Jun 30, 2026The cover clearly states that the reporting period ends on June 30, 2026.
• Report date2026-07-17Inferred from the file date and report disclosure information.
• Research institutionJ.P. MorganBoth the report title page and the disclosure section point to J.P. Morgan.
• AuthorsShirley Yau; Alvin AuThe cover lists the two authors and J.P. Morgan Securities (Asia Pacific) Limited.
• Credit research rating distributionOverweight 27%; Neutral 57%; Underweight 16%The disclosure table shows J.P. Morgan's global credit research coverage rating distribution as of July 4, 2026.
• Investment banking client shareOverweight 84%; Neutral 84%; Underweight 89%The disclosure table shows the share of entities in each rating category that received investment banking services from J.P. Morgan in the past 12 months.

Impact & implications

This report is suitable for quarterly tracking of the China fixed income market and credit risk monitoring. For investors, the key is not a single buy/sell recommendation, but using data on yields, fund flows, supply, holdings, rating actions, maturities, and defaults to identify structural changes and potential pressure points in the China onshore bond market.

Risks

• The report is primarily quarterly data monitoring, and the source material does not provide complete chart values; specific investment judgments need to be combined with the original charts and the latest market prices.
• Changes in China onshore bond yields, inflation, reserve requirement ratios, and the liquidity environment may affect the performance of fixed income assets.
• Corporate bonds, LGFV bonds, and real estate bonds face risks of rating downgrades, concentrated debt maturities, refinancing, and defaults.
• Changes in foreign bond inflows, BondConnect trading volume, foreign currency loans and deposits, and cross-border capital flows may affect market sentiment and liquidity.
• The disclosure section notes that research views and forecasts only represent judgments as of the report date and may change in the future.

What to watch

• The relative performance of China onshore AAA bonds versus offshore investment-grade indices.
• Short-end interbank rates, new issue bond yields, and onshore liquidity indicators.
• Changes in foreign bond inflows and BondConnect trading volume.
• Gross supply and net supply of government bonds, financial bonds, and corporate bonds.
• Corporate bond issuance and maturity pressure across SOE, POE, industry, and rating dimensions.
• Outstanding amounts, credit spreads, and local fiscal and economic indicators across provinces for LGFV bonds.
• Maturity distribution, rating actions, and changes in default rates for real estate bonds.