Bond classification

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China's bond market has a rich variety of bonds, which can be classified according to the issuer, interest rate type, trading place and other characteristics. The following is a brief introduction to the main types of bonds in China's bond market:

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1. Classified by issuer

1.1 Government Bonds

• Definition: Bonds issued by the Ministry of Finance to raise national financial funds.
• Features:
  • Highest Credit Rating.
  • Low Interest Rate.
• Main Investors: Banks, Insurance companies, Individual Investors.

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1.2 Local Government Bonds

• Definition：Bonds issued by local governments for infrastructure construction or special funding needs.
• Features：
  • Including General Bonds and Special Bonds.
  • Lower Credit Risk than Government Bonds.

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1.3 Financial Bonds

• Definition：Bonds issued by financial institutions such as policy banks and commercial banks.
• Types：
  • Policy Financial Bonds：Issued by China Development Bank, Agricultural Development Bank, and others.
  • Commercial Bank Bonds：Including Ordinary Financial Bonds、Subordinated Bonds、Capital Supplementary Bonds。

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1.4 Enterprise Bonds

• Definition：Bonds issued by enterprises with legal personality.
• Features：
  • Approval from the National Development and Reform Commission (NDRC) is required.
  • Credit Rating Depends on Corporate Quality.

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1.5 Corporate Bonds

• Definition：Issued by listed or non listed companies (Company Issuers) to raise funds for production and operation.
• Features：
  • Approval from the China Securities Regulatory Commission (CSRC) is required.

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1.6 Asset-Backed Securities, ABS

• Definition：Bonds issued based on a specific asset portfolio, such as accounts receivable and loan assets.
• Features：
  • Cash Flow from Asset Pool.

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2. By Trading Venue

2.1 Interbank Bond Market

• Definition：Institutional Investor-Dominated Market.
• Features：
  • High Liquidity。
  • Mainly Government Bonds, Local Government Bonds, and Financial Bonds.

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2.2 Exchange Bond Market

• Definition：Composed of the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE).
• Features：
  • More Accessible to Individual Investors.

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2.3 (Bank Counter Market

• Definition：A bond trading market for individual investors.
• Features：
  • Savings bonds and policy financial bonds can be purchased.

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3. By Interest Rate Type

3.1 Fixed-Rate Bonds

• Definition：Fixed Coupon Rate Over the Life of the Bond.
• Features：
  • Stable Returns
  • Price Decline Risk in Rising Interest Rate Periods

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3.2 Floating-Rate Bonds, FRNs

• Definition：Coupon Rate Adjusted Based on Market Interest Rates
• Features：
  • Returns Fluctuate with Interest Rates

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3.3 Zero-Coupon Bonds

• Definition：No Coupon Payments, Issued at a Discount
• Features：
  • Principal and Interest Paid in Full at Maturity

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4. By Repayment Method

4.1 Bullet Bonds

• Definition：Principal and Interest Paid in a Lump Sum at Maturity。

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4.2 Amortizing Bonds

• Definition：Principal and Interest Paid in Installments。

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5. By Special Features

5.1 Convertible Bonds

• Definition：Bond Can Be Converted into Issuing Company’s Stock。
• 特点：
  • Dual Benefit of Bonds and Stocks。

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5.2 Callable Bonds

• Definition：Issuer Can Redeem Bond Early at an Agreed Price

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5.3 Puttable Bonds

• Definition：Investor Can Sell Bond Back to Issuer

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6. By Credit Rating

6.1 High-Credit-Rating Bonds

• Definition：Low Default Risk
• 种类：e.g., Government Bonds, Policy Financial Bonds

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6.2 Low-Credit-Rating Bonds

• Definition：High Default Risk。

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Summary and Comparison

Category	Main Types	Features
Issuer	Government Bonds,Local Bonds,etc	Different Risk and Return Levels by Issuer
Venue	Interbank Market,Exchange Market	High Liquidity in Interbank Market，Friendly to Individuals
Rate Type	Fixed-Rate,Floating-Rate	Fixed Rate for Falling Rates, Floating Rate for Rising Rates
Repayment	Bullet,Amortizing	Lump Sum for Long-Term Investment，Installment for High Liquidity Needs
Special Features	Convertible,Callable	Additional Options for Investors or Issuers
Credit Rating	High-Grade,低信用等级	Lower Credit Rating Increases Risk and Returns

China's bond market has a wide range of types, and investors can choose appropriate bond types according to their own risk preferences and investment objectives.