The opening-up of the bond market proceeds mainly through three channels: • Bond Connect’s ‘Northbound Trading’ — overseas investors trade bonds in China’s interbank bond market via infrastructure connectivity between Hong Kong and the mainland. In August 2026, its monthly trading volume reached RMB 803.9 billion, with an average daily turnover of RMB 3.83 billion; by end-month, 844 overseas investors had entered the market. Among the bonds traded, policy bank bonds accounted for 58%, government bonds for 22%, and 7–10-year maturities made up 51% — indicating stronger overseas investor interest in medium- to long-term instruments. • Swap Connect — enables overseas investors to participate in RMB interest rate swaps in the interbank market to hedge interest rate risk. In August 2026, the ‘Northbound Swap Connect’ recorded 906 transactions with a total notional principal of RMB 543.101 billion; cumulatively, 99 overseas institutions had entered the market. • Direct Market Access — overseas institutions may enter the interbank market directly via the settlement agent model. As of end-May 2026, there were 633 such institutions counted on a legal-entity basis. As of end-March 2026, the custodial balance of overseas institutions in China’s bond market stood at RMB 3.2 trillion, representing 1.6% of the total custodial balance in China’s bond market. Though this share remains modest, both growth potential and strategic significance are substantial. Section IV: Bond Valuation I. Principles of Bond Valuation The core idea underlying bond valuation is simple: a bond’s intrinsic value equals the present value of all its future cash flows. Where: — represents the bond’s intrinsic value; — denotes the coupon payment in period ; — is the face value; — is the discount rate (typically the market interest rate or the investor’s required rate of return); — is the number of remaining periods. This formula reveals two fundamental pricing principles: 1. Bond prices move inversely with market interest rates — when market rates rise, the discount rate rises, reducing the present value of future cash flows and thus lowering bond prices; conversely, prices rise when rates fall. This is the first ironclad rule for understanding bond investment. 2. Longer maturities imply greater price sensitivity to interest rate changes — for an identical change in interest rates, long-term bonds experience larger price fluctuations than short-term ones. This principle underpins the concept of duration. II. Key Factors Affecting Bond Value Factors influencing bond value fall into two categories: internal and external. (A) Internal Factors Factor Direction of Impact Maturity Longer maturity increases exposure to interest rate volatility and price uncertainty. Coupon Rate A higher coupon rate generates larger interim cash flows, lowering price sensitivity to interest rate changes. Call Provision A call option benefits the issuer but disadvantages investors, thereby reducing bond value. Tax Treatment Tax-exempt bonds yield higher after-tax returns; tax adjustments must be applied during valuation. Liquidity Higher liquidity lowers required liquidity premium, increasing bond value. Credit Rating Lower credit rating demands higher credit risk premium, raising the discount rate and lowering value. (B) External Factors • Market Interest Rates — the most critical external variable, moving inversely with bond prices. • Inflation — rising inflation expectations push up nominal interest rates, depressing bond prices. • Exchange Rates — for foreign-currency bonds, exchange rate fluctuations directly affect investors’ domestic-currency returns. III. Bond Quotation vs. Actual Payment Price Bond quotation and actual payment price are two distinct concepts, differing by accrued interest. Why distinguish between clean price and quoted price?

I. Bond Financing: Borrowing from the General Public In addition to borrowing from banks, enterprises can raise funds from the general public by issuing bonds. Ordinary individuals may also purchase corporate bonds — buying a bond is equivalent to lending money to the enterprise. Bonds with different maturities are accounted for using different accounts: Maturity Account Used Within 1 year Trading Financial Liabilities Over 1 year Bonds Payable 📌 Analogy: Purchasing government bonds means lending money to the state; purchasing corporate bonds means lending money to a company. II. Core Challenge in Bond Issuance: Coupon Rate vs. Market Rate • Basic Concepts • Bond face elements include face value (e.g., RMB 100), coupon rate (e.g., 8%), and term (e.g., 5 years). • The central tension lies in the fact that the stated coupon rate on the bond often differs from the prevailing market interest rate at issuance. • Three Issuance Scenarios • Par Issuance: When the coupon rate equals the market rate, the bond is issued at face value. • Premium Issuance: When the coupon rate exceeds the market rate, the issue price is above face value. • Discount Issuance: When the coupon rate is below the market rate, the issue price is below face value. • Pricing and Redemption Mechanism • Theoretical issue price = Present value of future coupon payments (as an annuity) + Present value of the face value at maturity; the discount rate used must reflect the market interest rate at issuance. • Redemption at maturity is standardized: principal is repaid strictly at face value (e.g., RMB 100), and interest is calculated strictly as “face value × coupon rate”, irrespective of the investor’s purchase price. • The essence of premium/discount: The price difference at purchase is not refunded upon maturity but is realized over the holding period as part of the investor’s return. The discount amount constitutes capital gain; the premium paid effectively pre-pays excess interest. • True Return: Yield to Maturity (YTM) • Key conclusion: For investors holding to maturity, their return is locked in at the market interest rate prevailing at the time of purchase — not the coupon rate. • YTM Formula: • P: Purchase price (issue price or secondary-market price) — determined by the market • C: Periodic coupon payment (face value × coupon rate) • F: Face value • YTM: True annualized return • Role of the coupon rate: It determines only the structure of cash flows (i.e., whether more income comes from coupons or capital gain/loss), not the total return. • Three Critical Preconditions for Return Lock-in 1. Holding to maturity without reinvestment consideration: If coupon income is reinvested, total wealth accumulation will also depend on subsequent market interest rate changes. 2. Fair market pricing: In the absence of special factors, YTM equals the market interest rate; if credit risk or liquidity differences exist (e.g., government guarantees, liquidity premiums, or tax advantages at issuance), then YTM = market interest rate + risk premium. 3. No early sale: If sold before maturity, the realized return depends on the market interest rate at the time of sale (reflected in the bond’s price), not the rate at purchase. Question: What happens if market interest rates decline during the holding period until maturity? One-sentence conclusion: Absolute cash flows remain unchanged and YTM remains locked; relative to new entrants, the investor holds an advantage; however, reinvestment yields a real loss; and capital gains are forfeited.

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Sociedad Quimica y Minera de Chile outlines key terms for its SQM4938111 corporate bond, including a 4.25% semi-annual coupon. The profile details maturity dates, face value, and redemption schedules for stakeholders.

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